Oil Prices Slip as Rig Count Steadies, Gold Prices Retreat

2016-03-21 06:36:00

Nathalie Huynh, Contributor

Talking Points:

Gold price retreated as investors took profit and left gold trades
Oil price slipped after US rig count halts its declines
Copper price traded muted after China’s monthly imports fell to the lowest since 2004

U.S. oil prices dropped 1.4 percent andconsolidated around $39in the Asian afternoon,after a high of $41.20 on Friday. Consequently, the Canadian dollar strengthened to C$1.30 per USD. The number of active rigs counted by Baker Hughes Inc. rose by 1 to a total of 387 last week, following several weeks of declines. Oil prices previously garnered support from a consistent slowdown in rig count, as seen in the below graph.

Chart created by author – Data by Baker Hughes Inc. via Bloomberg

Among OPEC producers, efforts to reach an accord to freeze production continued with a meeting set for April 17 in Doha, Qatar. However the list of attendees remains unclear.

Copper prices also retreated from an 11-month high of 2.3235 on Friday, in spite of regional stock gains including a 1.8 percent gain in the Shanghai Composite. Metals mostly lowered, except for iron ore which scored 4.3 percent gain on Dalian Commodity Exchange. The outlook for copper remains gloomy as data from China’s General Administration of Customs revealed that monthly imports fell to the lowest since 2004.

Gold prices lowered to the $1250 area today as investors took profit on their long positions which built up before and during U.S. FOMC event last week. Money managers have reduced both long and short bets in gold, according to U.S. CFTC and our own SSI. This likely brings gold volatility down.

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GOLD TECHNICAL ANALYSIS – Gold prices slipped for a third day although they remained above the support trend line. A slight upward momentum signal indicates consolidation ahead. For now bullion is trapped between the trend line and 2015’s top at 1307.6.

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper prices did not follow through with higher moves after a break of the 2.3020 resistance level on Friday. Prices remain in a correction, although pressure continues to build on the upside. A firm support level comes at 2.1485.

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS – Oil prices traded sideways above the 38.99 support level for a second day. It will be a good sign for the oil bulls if prices could sustain these levels throughout this week, or continue rising toward the resistance level at 43.43.