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Oil prices rose overnight on supply fears as the extent of actual damage to US Gulf of Mexico production and refining infrastructure remained unknown. Brent crude gained 1.10 percent to USD 73.35 per barrel, while WTI gained 0.70 percent to USD 69.10 per barrel. After lackluster China PMI data and news that the crucial US Colonial oil pipeline may partially reopen following Hurricane Ida, Asian prices have fallen. Brent crude is down 0.40 percent to USD 73.05 a barrel, while WTI is down 0.35 percent to USD 68.65 a barrel.
The focus now shifts to the OPEC+ meeting tomorrow, where the group is expected to maintain its output policy and increase production by 400,000 barrels per day. The sweet spot for Brent crude appears to be between USD 70.00 and USD 75.00 per barrel, and with the futures curve in backwardation, demand remains strong despite the short-term noise. Last week’s V-shaped price recovery will help reassure OPEC+ that markets can absorb the additional supply.
Brent crude is expected to trade in a range of USD 72.00 to 74.00 per barrel until new information from OPEC+ and IDA becomes available. Similarly, WTI should be found at USD 68.00 to 70.00 per barrel. Gold experienced modest profit-taking on long holdings while currency and bond markets were quiet overnight. In a lackluster session, gold fell 0.40 percent to USD 1810.50 an ounce. The yellow gold is up 0.25 percent today, to USD 1815.00 per ounce, thanks to a weaker US currency in Asia.
For the time being, gold’s surge appears to have lost steam, but it isn’t displaying any significant indications of exhaustion. The 100 and 200-day moving averages (DMAs) between USD 1809.70 and USD 1813.20 per ounce provide nearby support for gold. Gold will consolidate gains as long as it remains above this zone on a closing basis. Only a drop below USD 1780.00 an ounce will put the rally’s sustainability in doubt, while it meets stiff opposition between USD 1830.00 and USD 1835.00 an ounce. Gold, like currency markets, appears to be awaiting Friday’s US job statistics to determine its next course of action.