Crude Oil Prices Retreat as Markets Await US Inventory Data
London (May 31) Crude oil prices are back on the defensive having briefly corrected higher following last week’s blood-letting. The benchmark WTI contract suffered the largest one-day loss in 11 months after the extension of the OPEC production cut scheme underwhelmed investors.
Crucially, the cartel and its allies opted to press on with existing efforts – which have thus far struggled to outpace swelling swing production – rather than aim for deeper cutbacks. Within that context, all eyes now turn to inventory data to see if more of the same will yield similarly disappointing results.
The first round of data on that front comes from API, which is due to reveal its estimate for weekly stockpile flows today. Official EIA numbers on tap the following day are projected to show a 3.02 million barrel draw. The API outcome is likely to be judged against that baseline.
Gold prices edged lower as the priced-in 2017 rate hike outlook implied in Fed Funds futures narrowly steepened, undermining demand for non-interest-bearing assets. A clear-cut catalyst for the move is not readily apparent however, hinting that it may have been little more than a correction.
From here, the spotlight turns to the Fed Beige Book survey of regional economic conditions. A gloomy tone echoing mostly disappointing US economic data outcomes over the past six weeks may cool bets on rate hikes beyond next month’s FOMC sit-down, breathing new life into the yellow metal.
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GOLD TECHNICAL ANALYSIS – Gold prices pulled back to retest resistance-turned-support in the 1256.74-63.87 area. A break back below this area opens the door for a retest of 1241.20. Alternatively, upward resumption that takes prices above the 38.2% Fibonacci expansion at 1280.35 paves the way for a challenge of the 50% level at 1300.73.
Crude Oil Prices Retreat as Markets Await US Inventory Data
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices recoiled from resistance at 50.09, the 23.6% Fibonacci expansion. From here, a break below theMay 26 low at 48.16 exposes the 46.47-47.12 area. Alternatively, a daily close above 50.09 targets the 38.2% level at 51.28.
Source: DailyForex
