Brent crude increased by 2.45% to USD 113.85 a barrel overnight, where it remains in quiet Asian trading. WTI rose by 3.30% to USD 113.65 a barrel, which remains in Asian trading. The gap between Brent and WTI has approached zero over the past two sessions, emphasizing the squeeze on refined supplies in parts of the US. This is a significant development and suggests that the risks begin to swing to the topside once again for oil after months of range trading.
Resistance at USD 115.00 a barrel for Brent crude has limited gains. Failure indicates a retest of USD 120.00 in the sessions ahead—support fibs at USD 108.80 a barrel. WTI has taken out resistance at USD 111.50 a barrel, which now evolves support. It is now endangering the top of the longer-term range call at USD 115.00.
Gold Stages Substitute Rally
Gold slumped over the past two sessions; it staged a corrective 0.72% rally to USD 1825.50 an ounce overnight, framing 0.16% higher to USD 1827.75 in Asian trading. Overnight, a softer US dollar and weaker US yields preserved gold from further losses. Still, it stays entirely at the mercy of US dollar weakness for support.
The overnight lows were about USD 1789.00 from initial support, followed by USD 1780.00 an ounce. Failure of the latter implies a deeper correction to USD 1700.00. Gold has resistance exceeding USD 1830.00, followed by the 200-DMA at USD 1836.50, and then USD 1850.00 an ounce. Only a hasty US dollar sell-off will likely change the bearish technical outlook.