Commodities outlook: Uptrend in focus for oil

Brent and WTI oil have been hit over the last week by comments on the reduction of the OPEC output cuts. Even today Russia’s economic minister commented, saying an oil price between $65 and $70 per barrel (/bbl) are acceptable for the oil producing nation.

Last week we noted that US crude production rocketed in March to 10.47 million barrels per day (bpd), this is a monthly record (EIA).

From a technical point of view, the upward looking trendline is in focus. Any break below and close below this point would look bearish, and the next level down in terms of support could be the $64/bbl handle which was used as resistance in late Feb.

Source: Trading View         Past performance is not a guide to future performance

Gold

Gold has been hampered by the strength in the US dollar (USD) of late and a strong payroll report didn’t do much for the precious metal either.

Moves to the upside look favourable if the trendline in the chart holds. Having said that, a lower high and lower low have been made, but the $1,307/oz consolidation low is still to be tested. The next support level on the way down is just below $1,264/oz so, if we break any lower, we could see a sustained move down.

Risk sentiment has been formidable in the past few years, with all manner of political issues in both the US and Europe (including the UK – for now) having prompted temporary fall-outs, which have been resolved pretty swiftly despite financial conditions starting to tighten up.

Gold prices have adopted a stronger correlation to the USD akin to the rest of the metals complex as risk complacency (as some would call it) has been prevalent.

There have been some early signs that nervous markets will weather USD strength in preference to holding the long established safe haven, with tighter FX correlations more likely with USD/JPY and USD/CHF in the major pairings.

Source: Trading View                 Past performance is not a guide to future performance

Copper

Copper has been extremely resilient, desperately clinging on the $3/lb (per pound) handle, while the USD strength kicked in. Now that we are seeing some pullback in the dollar the industrial metal is pressing on, this morning testing the $3.10/lb level and threatening to break consolidation.

In Asia, Shanghai copper rose to its highest level in more than six weeks today, underpinned due to the softer dollar and supply concerns amid wage negotiations at the world’s largest copper mine (Escondida) where they are set to start new talks.

Source: Trading View                  Past performance is not a guide to future performance

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