Crude oil once again held above key $75.50 support despite U.S. stock markets that continued to careen to new multi-month lows. At one point in Wednesday’s session, oil prices got as low as $74.39, but the commodity clawed its way back above support by the end of the New York session. Granted, stocks were holding near neutral territory when crude oil settled at $75.63, but regardless, the $75.50 level has put up a good fight thus far. Currently, prices are back below support, and if stocks continue to sink, it is likely that crude will probe even lower levels near $70 and perhaps below.
Wednesday’s inventory report was dead neutral. Crude oil inventories decreased 2 million barrels, gasoline inventories increased 0.5 million barrels, distillate inventories increased 2.5 million barrels, and total petroleum inventories increased 3.6 million barrels. Though more bearish than analysts’ expectations, the figures were very much in line with the 5-year average.
Gold Facing Crosscurrents
Gold $1240.60 -$1.66 -0.13%
Another day, another $1.50 move higher in gold prices. While gold is benefitting from safe haven demand on the
one hand, it is also facing a certain headwind that strong-performing assets often encounter during broad financial selloffs, namely selling pressure from investors and traders attempting to raise cash. The combination of these two forces has effectively stalled gold prices. From a technical perspective, prices are still holding above a steep upward trendline that extends back to March, however, prices are also facing stiff resistance in the $1250-$1265 area. In the jargon of technical analysis, prices are forming either an ascending triangle or a rising wedge. The latter is a bearish reversal pattern, while the former is a bullish continuation pattern.
Silver $18.54 -$0.07 -0.38%
Like gold, silver rose on Wednesday, after the two metals decoupled the day before. In the current environment of strong risk aversion, there is little compelling reason for silver to rise significantly. Indeed, prices could be poised to fall under $18. As we stated yesterday, there is not enough room for two save haven metals when there is such turmoil in the broader financial markets.
