Crude Oil Prices at Risk on Eurozone and US Data, BOE Outlook

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GOLD & CRUDE OIL TALKING POINTS:

  • Crude oil prices pinned to support guiding 2019 upswing
  • Gold prices idling but overall chart setup remains bearish
  • EZ and US data, BOE forecast update may sour sentiment

Crude oil prices diverged from macro-level influences yesterday, seemingly focusing on supply/demand dynamics instead. A drop early in the day seemed to reflect pre-positioning for official inventory flow data after a leading release from API predicted a much larger build than analysts expected.

The move lower extended once the EIA reported an even more dramatic rise than API envisioned (at 9.93 million barrels). Follow-through proved to be limited however, perhaps reflecting the pre-pricing noted ahead of the figures’ publication. That allowed prices to drift back upward in the latter half of the session.

Gold prices plunged in the wake of the Fed monetary policy announcement. Benchmark bond yields surged alongside the US Dollar as comments from Chair Powell struck a less-dovish tone than the markets anticipated. That undermined the appeal of non-interest-bearing and anti-fiat assets.

CRUDE OIL PRICES MAY FALL ON EUROZONE AND US DATA, BOE QIR

Looking ahead, an assortment of activity indicators – notably Eurozone manufacturing PMIsurveys as well as US factory and durable goods orders data – will inform bets on the global business cycle. Downbeat results echoing the tendency to underperform on recent macro news-flow may sour sentiment.

A monetary policy announcement from the Bank of England is also of note. No changes in policy are expected as Brexit uncertainty lingers but the central bank’s quarterly Inflation Report (QIR) will updateits economic projections. Downgrades may amplify worldwide slowdown fears.

If all of this translates into a broadly risk-off mood, crude oil may be pressured lower. Gold prices seem likewise vulnerable. The Fed’s neutral tone probably helps the US Dollar capitalize on haven demand and at least somewhat limits the downside on bond yields, at least in the near term.

See the latest gold and crude oil forecasts to learn what will drive prices in the second quarter!

GOLD TECHNICAL ANALYSIS

Gold prices are oscillating above support in the 1260.80-63.76 area. A daily close below that sees the next downside barrier in the 1235.11-38.00 zone. Alternatively, a move back above support-turned-resistance at the neckline of a Head and Shoulders (H&S) topping pattern – now at 1290.40 – eyes a falling trend line at 1297.30, followed by the 1303.70-1309.12 inflection region. The H&S formation implies a measured downside target at 1215.00.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to idle at rising trend support set from December lows. A break lower would neutralize the near-term upward bias, initially exposing 60.39 next. Meanwhile, buyers face a dense resistance region that runs through 67.03. Push above that sets the stage for a retest of the $70/bbl figure.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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