Oil Price Steadies on Early Signs That Supply Glut May Abate

2016-03-22 06:22:00

Nathalie Huynh, Contributor

Talking Points:

Gold price weakened amid broad USD recovery and low liquidity
Oil price picked up on renewed optimism that the supply glut may ease
Copper price formed an inside-day as Chinese stocks snapped gains

Commodity prices have stabilised after last week’s fluctuations. Oil, gold and copper prices are lingering within yesterday’s trading bands.

Optimism in oil prices resurfaced after energy data provider Genscape released report of the first draw in crude inventory since January at Cushing hub. Market participants are waiting for more insight with upcoming data from the American Petroleum Institute on Wednesday and U.S. Department of Energy on Thursday. Nevertheless, 2016’s high of 42.54 remains out of reach for now.

Gold prices traded near the low of yesterday’s trading band and around $1245. Poor liquidity in a short week before the Easter long weekend has led to low trading volume. A broad US dollar recovery also dampened other G10 currencies and gold. Gold prices remain muted while the debate goes on regarding the US’s rate hike plan.

Copper prices formed an inside-day today as Chinese stocks declined for the first time in six sessions. Prices have so far retracted well below a 5-month high of 2.3235. China’s demand for copper is forecasted to slow down this year from a 2.8 percent increase in 2015. The outlook for copper remains stagnant which may stem any upside surprises in the near future.

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GOLD TECHNICAL ANALYSIS – Gold prices stabilized near yesterday’s low and parked on the support trend line. The downside is in focus as gold continues its declines in the absence of a firm support level. Nevertheless, low market volatility may scale back any future losses

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper prices traded flat, concurrent to the first losses in Chinese stocks in six sessions. The 2.3020 resistance level continues to hold firmly at top. On the downside, the support level at 2.1485 remains safe from challenges.

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS – Oil prices edged up today although they remained well below a resistance level at 43.43. The previous resistance level at 38.99 has fully turned into a support level. Investors may expect higher moves ahead, although the pace will likely be gradual.