Crude Oil Prices Up Despite Virus On Hopes US May Stem Price War
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Crude Oil and Gold Talking Points:
- Crude oil prices rose with risk appetite and hope the US may get more involved in Saudi Arabia and Russia’s price war
- Massive monetary and fiscal measures to combat coronavirus effects have given risk appetite a lift
- Gold prices gained with haven bids for once not overwhelmed by cashing out
Crude oil prices rose in Friday’s Asia Pacific session as investors looked to possible US intervention in the price war between Saudi Arabia and Russia which has seen the market collapse this month.
Unable to agree on production cuts earlier this month as a response to the coronavirus’ devastating energy demand hit the two key swing exporters have been engaged in a game of chicken with the oil price which has taken it down to levels not seen since 2002.
However, in Thursday’s US hours President Donald Trump hinted that he could get involved in the price war at an unspecified ‘appropriate time.’ Prices were also supported by reports that regulators in key oil state Texas were considering lower production and also by US plans to supplement its emergency reserve.
Gold prices were higher as continued coronavirus-linked haven bids were reportedly for once not overwhelmed by investors’ need to cash out as has been the case often in the recent past.
The coming session is short of economic data and the virus story will remain dominant, but there may be some pause as investors digest personal income and spending figures out of the US for February.
Crude Oil Technical Analysis
Prices likely face a band of daily-chart resistance between last Friday’s closing high of $33.24/barrel and March 10’s close of $35.57. Bulls will need to regain these levels, perhaps at minimum, if they’re to make meaningful progress back from this week’s falls and those 2002 lows.
It’s far from clear that they’ll be able to do this anytime soon however and, while it must be unlikely that the oil market as a whole will be able to tolerate $20 prices for very long, those lows could well be revisited in short order if this week’s close can’t get closer to that resistance band.
Gold Technical Analysis
The gold price chart bears similarities to that of oil with a little nascent strength not so far looking anything like enough to take it back into more bullish territory.
In oil’s case a band of resistance guarding the psychologically important $1550/ounce area will need to be attempted if the market can build a base at current levels. That’s not impossible but the bulls have yet to leave this week’s three-month lows far enough behind them to preclude further falls.
$1450 seems to be providing reasonable support at present, with the market reluctant to probe below that in the past week. Friday’s closing action relative to this point may well prove instructive.
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--- Written by David Cottle, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.