Crude Oil, Natural Gas Vulnerable As Supply Glut Concerns Persist

Talking Points

• Crude Oil Extends Declines As Supply Glut Concerns Linger
• Silver Cracks Critical 19.00 Floor Casting The Spotlight On 18.50
• Natural Gas Braces For Volatility Ahead of Upcoming Storage Data

Most major commodities have managed to regain their footing in Asian trading today after suffering significant losses on Wednesday (WTI -1.16 percent, Gold -0.45 percent). Crude oil was sent spiraling to a multi-month low following another lackluster set of inventories figures. Total crude stocks decreased by less than forecast, alongside a rise in supplies at Cushing. Further, US production rates remain elevated near their highest in almost three decades. The latest round of data leaves expectations of continued supply glut to linger, which in turn may keep pressure on crude.

A light US docket over the session ahead may afford the precious metals little guidance via their pricing currency, the US Dollar. Nonetheless the greenback has proven its potential to sustain its advance even in the absence of major supportive news flow this week. This suggests that the prospect of further gains for the reserve currency should not be precluded. Sustained USD strength would likely compound the weight bearing down on gold and silver from ebbing safe-haven demand.

Finally, natural gas may be set for another volatile session on the back of upcoming storage data. Another above-average injection print would bolster expectations for abundant supply, which in turn could keep the energy commodity capped below the $4.00 handle.

UPCOMING ECONOMIC DATA

Source:DailyFX Economic Calendar, Times In GMT

CRUDE OIL TECHNICAL ANALYSIS

WTI has hit its Head and Shoulders pattern target in recent trade amidst a sustained downtrend on the daily. A break of the nearby 91.20 floor would open a knock on the 90.20 barrier. Whereas, a climb over the descending trendline on the daily would be required to negate a bearish technical bias for the commodity.

Crude Oil: Hits Head and Shoulders Target, Downside Risks Remain

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold has maintained its downward trajectory after sliding below the 1,257 mark. Alongside signs of a short-term downtrend the spotlight is left on the June 2014 lows near 1,241, below which would likely see buying interest renewed at 1,233.

The DailyFX SpeculativeSentimentIndex suggests a mixed bias for gold based on trader positioning.

Gold: Remains At Risk Amid Sustained Dowtrend

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

Silver has finally cracked the critical 19.00 handle. With a core downtrend still intact the push below the noteworthy floor is seen as a fresh opportunity for short positions targeting the 18.50 mark. A daily close above 19.00 would warn of a ‘false break’ and raise the probability of a corrective bounce.

Silver: Awaiting Downside Break To Open 18.50

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper is left at a crossroads near 3.08 following a dramatic decline from its descending trendline on the daily. A Shooting Star formation amid mounting evidence of a downtrend leaves shorts preferred on a break below the floor. Buying interest may be renewed on a retest of the June lows near 3.01.

Copper: Peels Back From Trendline Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

The tide has turned for palladium after the precious metal breached its ascending trend channel on the daily. Further, the slide below the Head and Shoulder’s neckline (866) suggests a downside target of 817. Interim buying interest is likely to be renewed at the August lows near 836.

Palladium: Neckline of Head and Shoulders Pattern Broken

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum’s grind lower has continued alongside a core downtrend on the daily. The push below soft buying support at 1,383 has cast the spotlight on the 2014 lows near 1,360.

Platinum: Eyeing 2014 Lows As Downward Trajectory Maintained

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

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