. Daily Commodity Analysis - Oil Drops as OPEC+ to Hike Output

Daily Commodity Analysis – Oil Drops as OPEC+ to Hike Output

Daily Commodity Analysis – Oil Drops as OPEC+ to Hike Output

04 Jun 2024

Introduction

Gold and silver prices trade lower despite a weaker US dollar due to expectations of Fed rate cuts. The downside for gold is limited by this dovish sentiment, while silver is pressured by rising US yields. Oil prices extend losses as OPEC+ plans to increase production, while natural gas surges on weather forecasts and production trends.

Markets In Focus Today – GOLD

Gold prices steady as rate cut speculation puts dollar at 2-mth low.

Gold price trades with bearish bias on Tuesday, largely ignoring a combination of supporting factors.Fed rate cut bets drag the USD to a nearly two-month low, but does little to lure XAU/USD bulls.Traders now look forward to this week’s important US macro data and key central bank event risks.Gold price (XAU/USD) trades in negative territory during the European session on Tuesday and erodes a part of the previous day’s recovery gains from the $2,315-$2,314 area, or over a three-week low. The downside, however, seems cushioned in the wake of firming expectations that the Federal Reserve (Fed) will cut interest rates later this year, bolstered by disappointing US macro data on Monday. This, in turn, drags the US Dollar (USD) to a near two-month low and should continue to act as a tailwind for the non-yielding yellow metal.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 2346.8955 | Negative Crossover | Bearish
  • MA 20 : 2348.3264 | Negative Crossover | Bearish
  • MA 50 : 2310.8942 | Positive Crossover | Bullish

Simple :

  • MA 10 : 2344.3463 | Negative Crossover | Bearish
  • MA 20 : 2358.7327 | Negative Crossover | Bearish
  • MA 50 : 2334.6866 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 47.9933 | Neutral Zone | Neutral

Stochastic   Oscillator : 91.75 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 2417.4629 R2 : 2458.2274
  • S1 : 2285.4964 S2 : 2244.7319

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 2362.19 | Take Profit : 2323.23 | Stop Loss : 2393.04

SILVER

XAG/USD depreciates to $30.50 due to improved US yields.

The non-yielding Silver loses ground as US Treasury yields edge higher.Silver prices could strengthen as the Fed is expected to deliver at least a 25 basis-point rate cut in 2024.The safe-haven demand for Silver diminishes by easing tensions in the Middle East.Silver price retraces its recent gains, trading around $30.50 per troy ounce during the Asian session on Tuesday. The upward correction in the US Treasury yields dampened the demand for non-yielding assets like Silver. However, Silver price could limit its losses due to growing expectations of interest rate cuts by the Federal Reserve (Fed) in 2024. This sentiment is reinforced by the unexpected drop in the ISM Manufacturing PMI to 48.7 in May, down from April’s reading of 49.2 and below the forecast of 49.6. The US manufacturing sector experiencing its second consecutive month of contraction, marking the 18th in the last 19 months.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 30.71 | Negative Crossover | Bearish
  • MA 20 : 30.86 | Negative Crossover | Bearish
  • MA 50 : 30.47 | Negative Crossover | Bearish

Simple :

  • MA 10 : 30.67 | Negative Crossover | Bearish
  • MA 20 : 31.16 | Negative Crossover | Bearish
  • MA 50 : 30.82 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 44.85 | Neutral Zone | Neutral

Stochastic   Oscillator : 21.31 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 31.16 R2 : 32.49
  • S1 : 29.72 S2 : 28.31

Overall Sentiment : Bullish Market Direction : Sell

Trade Suggestion : Limit Sell : 30.12 | Take Profit : 28.61 | Stop Loss : 31.34

CRUDE OIL

WTI drops below $74.00 as OPEC+ plans to ease Oil production cuts.

WTI price lost ground as OPEC+ intends to phase out production cuts of 2.2 million barrels per day over 2025.The US is purchasing an additional 3 million barrels of Oil for the country’s Strategic Petroleum Reserve.Oil prices may struggle further due to the expectations of the Fed maintaining higher rates for longer.West Texas Intermediate (WTI) Oil price continues to decline for the fifth consecutive day, trading around $73.90 per barrel during the Asian session on Tuesday. This drop in crude Oil prices is attributed to the Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, announcing a gradual plan to ease some of their Oil production cuts. OPEC+ plans to phase out voluntary production cuts of 2.2 million barrels per day (bpd) over the next year, starting in October. By December, over 500,000 bpd are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 76.7404 | Negative Crossover | Bearish
  • MA 20 : 77.9631 | Negative Crossover | Bearish
  • MA 50 : 79.3841 | Negative Crossover | Bearish

Simple :

  • MA 10 : 77.1959 | Negative Crossover | Bearish
  • MA 20 : 78.1243 | Negative Crossover | Bearish
  • MA 50 : 81.1747 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 29.3228 | Sell Zone | Bearish

Stochastic   Oscillator : 8.9588 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 80.3846 R2 : 81.6628
  • S1 : 76.2468 S2 : 74.9686

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 74.58 | Take Profit : 71.76 | Stop Loss : 76.62

NATURAL GAS

Natural gas Price Surge Fueled by Easing Production Concerns, Weather.

Natural gas futures surged , driven by unexpected shifts in weather forecasts predicting warmer temperatures across most of the United States and supportive production trends. This sudden change sparked strong national demand, especially in Texas and the Eastern Region of the U.S., leading to a sharp opening gap in futures prices. The key question now is whether this rally can be sustained amidst substantial supply and rising production levels. The natural gas market has experienced increased volatility, with daily price movements expanding to a 10-20 cent range. This heightened volatility reflects the market’s uncertainty regarding future weather conditions and production levels. Given the substantial inventory levels and rising production, the short-term outlook for U.S. natural gas prices remains cautious.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 2.4846 | Positive Crossover | Bullish
  • MA 20 : 2.3882 | Positive Crossover | Bullish
  • MA 50 : 2.1752 | Positive Crossover | Bullish

Simple :

  • MA 10 : 2.5237 | Positive Crossover | Bullish
  • MA 20 : 2.4233 | Positive Crossover | Bullish
  • MA 50 : 2.0279 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 61.8865 | Buy Zone | Bullish

Stochastic   Oscillator : 43.4495 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 2.7525 R2 : 3.0175
  • S1 : 1.8945 S2 : 1.6295

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 2.64 | Take Profit : 2.95 | Stop Loss : 2.48

Elsewhere In The Commodity Market

Gold down (0.7%) at 2333.76, Silver down (2.67%) at 29.95, Palladium down (0.92%) at 915.52, Platinum down (0.94%) at 1005.80, Brent Crude Oil down (0.88%) at 77.42, WTI Crude Oil down (0.89%) at 77.12 as of writing time.

Key Economic Events & Data Release Today:

(AUD) Retail Sales (MoM) Forecast 0.1%, Previous –0.4% at 07:00. (EUR) German Unemployment Change (May) Forecast 7K, Previous 10K at 13:25. (USD) JOLTs Job Openings (Apr) Forecast 8.370M, Previous 8.488