Crude Oil Prices Struggle on Brimming US Inventories, Rising Exports

CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices struggle as US inventories fall less than expected, exports rise
  • Gold prices retreat but soft services ISM data caps losses as bond yields drop
  • US market closures to reduce liquidity, might amplify any kneejerk volatility

Crude oil prices managed a tepid corrective rise following yesterday following the prior session’s potent downswing, echoing a broader risk-on tilt across financial markets. The move failed to gain substantive momentum however as EIA inventory flow data showed stockpiles shed a smaller-than-expected 1.085 million barrels last week. The Census Bureau also said US oil exports rose in May.

Gold prices were mired in consolidation mode in the meanwhile, digesting the previous day’s explosive gains. An early corrective pullback found support after the US services ISM gauge undershot forecasts as expected, putting growth in the economy’s largest sector at the weakest in two years. That nudged benchmark Treasury bond yields lower, putting a floor under the yellow metal but falling short of catalyzing gains.

US HOLIDAY TO DRAIN LIQUIDITY, BOOST KNEEJERK VOLATILITY RISK

Looking ahead, US exchanges will close for Independence Day holiday, draining liquidity levels. That might make for a quiet session ahead, putting the spotlight on Friday’s US jobs report as the next major inflection point. Diminished participation levels might amplify knee-jerk volatility if an unexpected headline roils markets however, warning investors to proceed with caution.

Get the latest crude oil and gold forecasts to see what will drive prices in the third quarter!

GOLD TECHNICAL ANALYSIS

Gold prices are idling near resistance at 1433.85, the confluence of August 2013 high the underside of support-turned-resistance set from December 2016. A break above it confirmed on a daily closing basis opens the door for a test above the $1500/oz figure. Alternatively, a turn below rising trend support at 1392.81 targets a dense support bloc running through 1346.75.

Crude Oil Prices Struggle on Brimming US Inventories, Rising Exports

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are digesting losses after breaching support at 57.24. The next downside barrier lines up in the 54.55-55.37 area, with a further push below that paving the way for a challenge of the 50.31-51.33 region. Alternatively, a reversal above resistance at 57.88 exposes the 60.39-95 zone anew.

Crude Oil Prices Struggle on Brimming US Inventories, Rising Exports

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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