Crude Oil Prices Crumble As Inventories Leave Lack Of Positive Cues

Talking Points

• Gold May Consolidate As US Dollar Bulls Left Lacking Fuel
• Crude Oil Faces Absence Of Positive Fundamental Cues
• Precious Metals Testing Technical Barriers Following Rebound

The precious metals advanced across the board on Wednesday after a dovish set of FOMC Minutes likely prompted profit-taking on USD longs. After 12 straight weekly advances the threshold to reinvigorate the greenback bulls may be high. This suggests a light US docket over the session ahead that includes Initial Jobless Claims may struggle catalyze a recovery for the reserve currency. In turn this could afford gold and silver a further consolidation.

Meanwhile, WTI carved another 2014 low in recent trade as the DOE’s Weekly Petroleum Status report revealed an overwhelmingly bearish set of figures. Total crude stocks climbed by just over 5 million barrels for the week – the largest increase since April. Further, US crude production rose to another multi-decade high and refinery utilization declined to its lowest since June. The latest round of figures are likely to leave supply glut concerns to linger and leaves the commodity lacking bullish fundamental cues. Nonetheless, a correction for the crude benchmarks should not be neglected, given the speed and magnitude of recent declines.

Also in the energy space, natural gas was dumped by traders (-2.01 percent) ahead of storage data due on Thursday. Another weekly injection above the seasonal average could keep anticipation over ample supplies alive and may continue to keep prices depressed.

ECONOMIC EVENTS

Source:DailyFX Economic Calendar, Times In GMT

Market Movements (Wed 8 Oct, 2014, Close 5PM EST)

CRUDE OIL TECHNICAL ANALYSIS

Crude oil has maintained its downward trajectory with the 2013 low near 85.45 in its crosshairs. The ongoing downtrend and absence of reversal signals further reinforces the prospect of continued weakness. A daily close above former support-turned-resistance at 88.20 would be required to mark the potential for a base.

Crude Oil: Continues March Towards 2013 Low

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold is at a crossroads near the 1,222 barrier as sentiment appears to be shifting. A daily close above the nearby barrier would be required to indicate the potential for a more sustained recovery. This may prove difficult given the overhanging trendline resistance.

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

Gold: At A Critical Juncture Near Key Technical Barrier

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

Silver’s recent rebound is seen as corrective within the context of a broader downtrend on the daily. A more convincing close above former support-turned-resistance at 17.30 would be required to mark the potential for a more sustained recovery. Yet with downside momentum fading (reflected by the ROC) a consolidation may be a likely path for the precious metal.

Silver: Consolidation May Ensue As Negative Sentiment Fades

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper remains at a crossroads as skims across the 3.00/1 floor after failing to post a more convincing daily close below the barrier. Amid the presence of a short-term downtrend a breakout could set the scene for a descent on the 2.96 barrier.

Copper: Awaiting “Breakout” Within Broader Bearish Context

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palladium is probing above the 38.2% Fib. hurdle near 801 which if broken with a more convincing daily close could herald an advance on 820. Negative sentiment that has plagued the precious metal also appears to be shifting as witnessed on measures like the Rate of Change indicator.

Palladium: Probing Above Fib. Level As Sentiment Shifts

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum has removed an impediment to its recovery at the 23.6% Fib. Level near 1,260. This may afford the precious metal an advance on the next barrier near 1,308. Yet a more sustained push higher would be questionable given the context of a core downtrend on the daily (signaled by the 20 SMA and ROC).

Platinum: Eyes Next Fib. Level Following Rebound

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

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