RCEP signing lifts oil prices
Oil prices fell on Friday, with Brent crude dipping 1.50%, and WTI falling 2.0% as the return of Libyan production and Covid-19 consumption fears across North America and Europe undermined prices. Most of those losses have been reversed in Asia today though, with the signing of the RCEP trade agreement lifting sentiment and the consumption outlook. Helping things along was robust GDP data from China, Japan and Thailand.
Brent crude has risen 1.10% to USD43.15 a barrel, and WTI has increased by 1.20% to USD40.60 a barrel. Brent crude held its 100-day moving average on Friday at USD42.75 a barrel, and that forms intra-day support. Resistance remains some distance away at USD45.50 and USD46.50 a barrel. WTI also flirted with its 100-DMA at USD40.40 a barrel, recapturing it in trading this morning. Support lies at Friday’s low around USD40.10 a barrel. Initial resistance is at USD41.00 and then USD42.00 a barrel.
Although both contracts gave back vaccine gains last week, they remain at the upper end of their multi-month ranges. The continuing outperformance by Asia economic data, hints that a recovery in consumption from the region will continue. Although a hit to US economic data from Covid-19 will occur, with Asia remaining on track, bearish pressures have ebbed.
Further spikes lower cannot be ruled out, especially if OPEC+ uses the recent rally continue releasing supply in the new year. But the Pfizer vaccine announcement has probably put a longer-term floor on oil prices. We are unlikely to see the October lows on either contract seriously retested now.
Gold benefits from US dollar weakness
Gold continued recovering on Friday, as the US dollar weakened across the board. Gold rose 0.65% to USD1889.50 an ounce and has climbed another 0.40% to USD1896.50 an ounce today in Asia. It is important to note, though, the gold recovery is because the US dollar is weaker, and it is not a gold story itself. Thus, gold remains vulnerable to equity sell-offs, or sudden rush to the greenback on haven flows. I am taking the recovery in gold with a massive grain of salt.
Gold faces substantial resistance nearby at its 50 and 100-DMA’s at USD1906.00 an ounce. A fall through USD1875.00 an ounce likely sees gold retest the USD1850.00 an ounce region.
Written by Admin
The PayPal app shown on an iPhoneKatja Knupper | DeFodi Images | Getty ImagesCheck out ...
The International Monetary Fund warned Tuesday that there's a risk inflation will prove to be ...
Barclays and HSBC buildings are seen amid the outbreak of the coronavirus disease (COVID-19), in ...