Crude Oil Looks To Inventories For Guidance, Palladium Tests 2014 High

Talking Points

• Palladium teases at a break above key resistance near its 2014 high
• Crude oil may face a volatile session on upcoming inventories data
• Gold and silver prices remain compressed within their recent ranges

Platinum and palladium have continued their push higher in recent trading, while gold and silver remain tightly compressed between key technical levels. Additionally, crude oil is at a critical juncture ahead of the weekly DOE Inventories Report where traders will get some guidance on whether near-record levels for stockpiles may have reached a turning point.

Geopolitical Risks Bolster Precious Metals

Tensions in Eastern Europe continue to garner attention in the commodities space. While safe-haven demand has likely helped support gold and silver prices, concerns over supply constraints on Russian exports may help explain platinum and palladium’s push higher. Russian production of palladium accounts for roughly 44% of global supply, and the possibility of sanctions by the West on the country’s exports may underlie the metals’ recent run towards its 2014 high.

Fears of supply constraints for platinum also likely stem from the ongoing mining strike in South Africa’s mining belt for the precious metal. Newswires reported earlier this week that as many as 3 workers had been killed in the latest of a series of casualties during the 4 month long strike. A resolution to the ongoing saga would likely ease traders’ concerns of supply from South Africa, which produces approximately 80% of platinum globally. This in turn could leave the metal vulnerable to a potential pullback.

Oil Looks To Inventories For Guidance

Crude oil may be set for a volatile session on the back of the upcoming DOE Weekly Petroleum Status Report. Total crude stocks are expected to be unchanged according to the median estimate from economists, which follows on from a prior drop in inventories of -1,781K barrels (full details on the economic calendar here).

As noted in prior commodities reports; one of the key themes that remains noteworthy in the US oil market is the glut in inventories apparent in the Gulf Coast district. This comes as the southern leg of the Keystone XL pipeline shifts supplies from the delivery point in Cushing to refineries. With stockpiles sitting at near-record levels, a lift in expectations for demand would likely be required to shift the current bearish outlook on the price of WTI.

CRUDE OIL TECHNICAL ANALYSIS

WTI’s recent recovery leaves a mixed technical bias for the commodity. Prices have pushed above the 20 SMA and the rate of change indicator has shifted into positive territory. However, further gains may be limited given that resistance is looming nearby at 102.30. Additionally, the persistently low levels of volatility (reflected by the ATR) do no little to suggest a breakout is on the cards.

Crude Oil: Recovery May Prove Limited With Resistance Nearby

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Several Doji formations on the daily suggest hesitation from the bears as gold teases at a push below critical support at $1,277. With volatility remaining low (as reflected on the ATR), the current environment may favor range-trading setups, which is further supported by a lack of momentum signaled by the Rate of Change indicator.

The DailyFX Speculative Sentiment Index suggests a mixed bias for gold based on trader positioning.

Gold: Dojis Highlight Trader Indecision

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

A Doji on the daily chart for silver denotes trader indecision near the all-important $19.00 handle. While there are warnings of a potential reversal in the trend, notable selling pressure near $19.70 may continue to cap gains for the precious metal. Additionally, low levels of volatility suggested by the ATR alongside fading downside momentum also hint at a more range-bound market environment for the precious metal.

Silver: $19.00 Handle Remains Critical Support…. For Now

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper has vaulted above its descending trendline from the 2014 high and cleared a notable resistance level at $3.085. With building upside momentum (as suggested by the rate of change indicator) and prices above the 20 SMA a bullish technical bias is offered. However, clearance of the $3.149 mark is required to open an extended advance on the $3.213 (the 61.8% Fib Retracement level).

Copper: Aims Higher Following Bullish Technical Signals

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palladium prices are being squeezed between trendline support and resistance near the 2014 high at $815. This puts the precious metal at a critical juncture. A break below the ascending trend channel would support a bearish bias with a target offered by the $777 mark, while a break above the recent high would open $847.

Palladium: Price Compression Leaves Prices Poised For A Break

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum continues to be supported above the $1,427 mark as upside momentum (as reflected by the rate of change indicator) begins to build. Recent price action has failed to confirm the Evening Star formation, and as such a bounce back to trendline resistance may be on the cards.

Platinum: Pushes Back Towards Trendline Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

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