Brent crude oil, gold and US natural gas slide on appreciating US dollar
Outlook on Brent crude oil, gold and US natural gas amid a rising US dollar post stringer-than-expected US ISM data.
Brent crude oil falls out of bed after strong US ISM data
Brent crude oil’s rise to $88.37 on Monday was followed by a swift 6% decline to $82.54 on better-than-expected US Services PMI data which suggests that the US Federal Reserve (Fed) could raise interest rates for longer which pushing the greenback higher.
On Tuesday morning the oil price tried to stabilise on easing Covid-19 restrictions in China which buoyed the demand outlook. Ongoing supply-side worries, triggered by fresh sanctions on Russian oil, may lead to a slip through Monday’s $82.54 low, however, and would push the late November trough at $80.81 back to the fore, a level last traded in January of this year.
Minor resistance can be spotted around the $85 mark and at the $87.99 to $88.37 mid-October low and Monday’s high. While the next higher $89.30 to $89.35 22 November and early December highs aren’t overcome, Brent crude oil remains in a downtrend since a series of lower highs and lower lows can be seen.
Minor support sits between the late September trough and the 21 November low at $82.55 to $82.32 and more significant support at Monday’s $80.81 low.
Gold drops sharply on strong US ISM services data
Last week’s gold rally abruptly ended at Monday’s $1,810 per troy ounce high with the precious metal slipping back towards its $1,765 late August high on the back of a stronger US dollar, pushed higher by US non-manufacturing (services) data for November which came in at a stronger-than-expected 56.5 (versus 53.3) and 54.4 in October.
With the precious metal flirting with its November-to-December support line at $1,771, a fall through $1,765 looks to be a distinct possibility, in which case the $1,735 to $1,727 key support area may soon be back in the picture.
It contains the mid-September and early October highs as well as the late November low. Resistance on Tuesday can be found around the $1,786 mid-November high and also along the 200-day simple moving average (SMA) at $1,794 as well as at Monday’s $1,810 peak.
US natural gas futures in free fall
US natural gas futures accelerated their descent and gapped lower on Monday on expectations of higher supply and milder weather across the US over the next couple of weeks.
The planned restart of the Freeport LNG export plant which was due to begin in mid-December had to be pushed back until the end of the year as the company is still awaiting regulatory approval, leaving more gas in the domestic market and pushing prices lower still.
The July and October lows at $5.330 to $5.297 are now within reach, a drop through which would push the price of US natural gas to levels last seen in March at $5.273. Further down lies the early March high at $5.188.
Immediate resistance is seen at the $5.564 to $5.687 late October and early November lows, followed by Monday’s gap at $6.025 to $6.205.
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