Crude Oil Extends Gains as Russia Stokes Output Deal Hopes
- Crude oil prices extend rally on output freeze deal hopes
- Gold prices continue to languish in familiar narrow range
- US CPI print, API inventories data in the spotlight ahead
Crude oil prices continued to push upward after Russian Energy Minister Alexander Novak said his country would be open to talks about a joint output freeze with OPEC and non-OPEC producers. The comments were made in an interview with Saudi Arabian newspaper Asharq Al-Awsat and bolster hopes of a deal to boost prices that have buoyed the WTI contract since last week.
On balance, the emergence of a supply-side deal seems unlikely considering the key parties to any such arrangement – Iran, Saudi Arabia and Russia – are currently on opposing sides of at least two active military conflicts (principally in Syria). Indeed, similar-sounding efforts have foundered recently. A lull in headline-grabbing news flow may offer space for skepticism to emerge on these grounds, undermining upside follow-through. Weekly API inventory data may overtake the spotlight in the near term however.
Meanwhile, gold prices continue to tread water as markets wait for an update to Fed policy expectations to rekindle directional momentum. This puts July’s US CPI report in focus. The core year-on-year inflation rate is expected to remain unchanged from the prior month at 2.3 percent. An upside surprise may boost Fed rate hike bets, weighing against anti-fiat demand and punishing precious metals. Needless to say, a downbeat print will probably produce the opposite result.
What do past crude oil and gold price patterns say about current price action? Find out here !
GOLD TECHNICAL ANALYSIS – Gold prices continue to tread water in a familiar range. Near-term support is at 1329.79, the August 8 low, with a break below that on a daily closing basis exposing the 38.2% Fibonacci retracementat 1308.00. Alternatively, a push above the 1367.15-77.74 area (double top, 38.2% Fib expansion) targets the 50% level at 1398.45.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices advanced for a third consecutive day, rising to the highest level in four weeks. Near-term resistance is now at 46.88, the 61.8% Fibonacci retracement, with a break above that on a daily closing basis targeting the 76.4% level at 48.70. The 50% Fib at 45.41 has been recast as support, with a move back below that paving the way for a rest of the 43.94-44.40 area (July 11 low, 38.2% retracement).
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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