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Crude Oil Prices Drift Lower Despite US-China Trade Hopes

Crude Oil Prices Drift Lower Despite US-China Trade Hopes

David Cottle, Analyst
What's on this page

Gold and Crude Oil Talking Points:

  • Crude oil prices were lower as risk appetite faltered in Asia despite new record highs for US stocks last week
  • Still, they didn’t fall far and remain supported by trade hopes
  • Gold prices edged up and threatened the top of their recent daily chart range
Oil - US Crude Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -6% 16% -1%
Weekly -21% 74% -10%
What does it mean for price action?
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Crude oil prices drifted lower in the Asia Pacific Monday session, but remained close to three-month highs after three straight weeks of gains which have now meant seven weekly rises out of the past ten.

This market remains essentially underpinned by hopes for progress in the trade story between US and China, and by recent deepening of production cuts by traditional producers.

However, sentiment seemed cautious in the region despite Wall Street’s rise to new record highs at the end of last week. Some investors are clearly still inclined to take profit as the markets thin out for holidays.

The latest trade news is broadly positive with US President Donald Trump saying over the weekend that he had had a constructive call with his Chinese peer Xi Jinping. For its part China said on Monday that tariffs would be lowered on 850 goods including frozen pork as well as some information technology products. Beijing also said it would reduce its interest in some local tech firms, according to a Reuters report.

The market has little of an energy-specific nature to look to for the rest of Monday, but Canadian monthly growth data and US durable good order figures will attract plenty of attention. The former is expected to come in a little weaker than the previous quarter, the latter quite a bit more strongly.

Crude Oil Technical Analysis

The overall ascending uptrend seen since the start of October looks safe enough on the daily chart. However, it has yet to take prices back to the resistance zone barring the way back to this year’s peaks. It may well do so quite early in the New Year, assuming that the prognosis for higher energy demand ahead holds up.

However, range trade between last week’s high and support in the $59.01 area seems likely. That latter point is where the market hovered between December 6 and 11 and, previously, on September 17 to 23.

Gold prices edged higher as risk appetite thinned out regionally. The market is reportedly holding up in anticipation of Chinese New Year buying. That celebration falls on January 25 and 26. Shanghai’s first gold options contract opened at the end of last week.

Protests against a new citizenship law in major gold buyer India may have disrupted retail buying there.

Gold Technical Analysis

On the daily chart prices remain nearly caught between the first and second Fiboancci retracements of this year’s impressive overall rise. The metal is still up by about 17% on the year despite its modest retreat through the third quarter.

Still prices remain well underpinned and look to be attempting an upside break of their current well-established trading range. That might embolden the bulls to try and take the market back above that first retracement level. That’s $1485.90, currently acting as resistance. Before that however they have to face the downtrend line from September’s highs.

That comes in quite close to current prices at $1484.82. However, any near-term break could be a selling opportunity as a conclusive upside movement may have to await the new year.

Commodity Trading Resources

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

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