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Crude Oil Prices Struggle at 7-Week Highs, API Data Ahead

Crude Oil Prices Struggle at 7-Week Highs, API Data Ahead

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Crude oil prices struggling after recovering to a 7-week high
  • Gold prices break 2-month uptrend before Fed rate decision
  • API crude oil inventories, US import prices data due ahead

Crude oil prices continued to mark time below the $51/barrel figure, left adrift by an EIA Drilling Productivity report that downgraded shale output expectations for September but called for record-high production in the following month. Reports of a drop in Saudi exports in July and a disruption of Nigerian crude deliveries were likewise taken in stride.

The spotlight now turns to the US inventory flow data from API. For context, the official set of analogous DOE statistics set to cross the wires on the following day is expected to show stockpiles added 2.68 million barrels last week. Prices may get a boost if the earlier report shows a smaller build. A larger one might not be as impactful as traders continue to discount hurricane-related refinery disruptions.

Gold prices did not wait for the FOMC monetary policy announcement for direction cues (as was suspected), moving sharply lower against a backdrop of firming Treasury bond yields that undermined the appeal of non-interest-bearing assets. The move followed further steepening in the priced-in Fed rate hike outlook, with the probability of a third rate hike before year-end rising to a two-month high of 50.6 percent.

Sellers may retain the upper hand as data shows US import price inflation accelerating for the first time in six months to hit an on-year rate of 2.2 percent in August, the highest since May. However, the case for lasting follow-through still seems to be somewhat flimsy until Fed Chair Janet Yellen and company have had their say on Wednesday.

What are the fundamentals driving long-term crude oil price trends? Find out here!

GOLD TECHNICAL ANALYSISGold prices accelerated downward, breaking trend line support set from July lows. Sellers now aim to challenge the 1295.46-99.25 area (38.2% Fibonacci retracement, double top), with a daily close below that exposing the 50% level at 1281.26. Alternatively, a reversal back above the 23.6% Fib at 1321.51 targets the 14.6% retracement at 1335.24 anew.

Crude Oil Prices Struggle at 7-Week Highs, API Data Ahead

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to mark time at resistance marked by the August 1 high at 50.40.A daily close above that opens the door for a test of the May 25 top at 51.97. Alternatively, a turn back below trend line resistance-turned-support at 49.05 exposes the September 11 low at 47.03.

Crude Oil Prices Struggle at 7-Week Highs, API Data Ahead

Chart created using TradingView

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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