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Crude Oil Prices May Break Out on Flood of Fundamental News Flow

Crude Oil Prices May Break Out on Flood of Fundamental News Flow

Ilya Spivak, Head Strategist, APAC

CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices may break out amid a flood of fundamental news flow
  • SPR- and NOPEC-linked hearings, EIA 2018 outlook and API data due
  • Gold prices might decline as risk appetite recovery boosts bond yields

Crude oil prices shot higher as US President Trump and his Iranian counterpart Hassan Rouhani exchanged threats on Twitter but the move proved fleeting, with the WTI and Brent benchmarks swiftly retreating to finish the day little-changed. Gold prices fell as the US Dollar corrected higher from Friday’s losses, undermining the appeal of anti-fiat assets.

CRUDE OIL PRICES FACE FLOOD OF FUNDAMENTAL NEWS FLOW

Crude traders may have opted against directional commitment as a slew of high-profile releases looms ahead. A US energy subcommittee will hold a hearing on draft legislation to modernize the US Strategic Petroleum Reserve (SPR). The plan envisions leasing underutilized storage facilities. Traders will be keen to see if it will imply accelerated capacity reduction.

Separately, the Senate Energy committee will hold a hearing to examine the factors impacting global oil prices. The sit-down may mark progress toward passing so-called “NOPEC” legislation (an acronym for the “No Oil Producing and Exporting Cartels” Act). This would allow the US government to sue OPEC member states for anti-trust violations.

As if that were not enough, the EIA 2018 International Energy Outlook will be released and while API will publish its weekly inventory flow statistics. The former will help inform global supply expectations while the latter will serve to foreshadow an analogous set of official DOE figures due Wednesday. Those are expected to show stockpiles shed 2.14 million barrels last week.

GOLD PRICES AT RISK AS RISK APPETITE RECOVERS

For its part, gold may remain on the defensive as risk appetite recovers across financial markets. Futures tracking the bellwether FTSE 100 and S&P 500 indexes are pointing firmly higher before London and New York come online. That may portend a rise in bond yields that undermines the appeal of non-interest-bearing assets including the yellow metal.

See our guide to learn about the long-term forces driving crude oil prices!

GOLD TECHNICAL ANALYSIS

Gold prices corrected higher after testing support marked by the 38.2% Fibonacci expansion at 1217.29. A daily close back above support-turned-resistance at 1236.66 opens the door for a retest of the 1260.80-66.44 area. Alternatively, a reversal lower that breaches below the 38.2% level exposes the 50% Fib at 1202.28.

Crude Oil Prices May Break Out on Flood of Fundamental News Flow

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain noncommittal near trend support guiding gains since early February, now at 66.07. Breaking below that on a daily closing basis initially targets the 63.96-64.26 area. Alternatively, a convincing rebound above the 68.74-69.53 zone paves the way for a test back above $72/bbl figure.

Crude Oil Prices May Break Out on Flood of Fundamental News Flow

COMMODITY TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

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