Commodities - Energy
Oil May Break Support as Monthly US Deficit Hits Record
Crude Oil (WTI) $81.25 -$0.24 -0.29%
Prices have pulled back from resistance at $82.23 to find support at a rising trend line established from the bottom in early February, with a break lower exposing $77.53. The percent-change correlation between the WTI contract and the MSCI World Stock Index has strengthened to 0.78, reflecting the increasing influence of risk trends. European shares and US index futures are going nowhere fast, leaving crude without a clear catalyst heading into the Wall St open. The US Treasury’s monthly budget statement may prove to be the most significant item on the calendar, with expectations calling for a monthly shortfall of -$222 billion in February – the largest since records began nearly 33 years ago. This send crude lower as investors bet that the unprecedented borrowing that will be required to finance the US’ public deficit will send borrowing costs sharply higher, snuffing crude demand along with overall economic growth. The US Department of Energy’s Weekly crude inventory and MBA Mortgage Applications figures are also on the docket.
Commodities - Metals
Gold, Silver to See Sellers Return on US Debt Outcome
Gold $1122.73 +$0.88 +0.08%
Gold prices found support at a rising trend line established from February’s swing low and rebounded to re-test support-turned-resistance at $1125.13. As with oil, the US monthly budget figures may weigh heavily on prices if they prove to fuel expectations of a sharp increase in borrowing costs that bears down on inflation. A break below the trend line will initially target the $1100 figure.
Silver $17.31 +$0.06 +0.32%
The outlook for silver is largely in line with its more expensive counterpart, with traders’ eyes trained on the US monthly budget statement. Prices have rebounded from support just below the $17.00 to re-test resistance near the previous swing high at $17.51, with a turn lower form here initially looking to challenge $16.86.
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