Oil price hit a 12-year low at 27.92 early in Asian session after the International Energy Agency (Paris) published view that oil glut may last through 2016. Mild winter temperature and weak economic sentiment were cited to drive demand from a 5-year high in third quarter to a 1-year low in fourth quarter. Global supplies are forecasted to add 285 million barrels this year in spite of lower non-OPEC production, and Iran likely contributes around 300,000 barrels/day by end of 1Q.
Brent-WTI spread has returned to positive territory, although both benchmarks are subject to prolonged weakness as they struggle to climb above $30. Our previous report highlighted that oil lacks momentum to sustain upward movement.
Gold price holds on to the topside as tumultuous selling of commodities and risk assets interfered with this week’s recovery. An unexpected ally came by way of Bank of England Governor Carney’s expressed hesitation to raise interest rate this year. Lower rate coupled with unruly adjustments in China’s growth opened up an angle of gold interests.
Copper price has been through high volatility this week and yesterday receded from the biggest bounce since January 11. Today’s breakdown of China GDP report affirmed a slowing trend in infrastructure fixed asset investment, not a good sign for industrial metals.
GOLD TECHNICAL ANALYSIS – Gold stays elevated in the upper area of 20-day moving average at 1082.3. Similar to copper, upward momentum is building up nicely in gold price. Although high volatility may not support a sustainable rally, upside moves likely persist amid a tumultuous market.
Daily Chart – Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper price returned below 2.0020 resistance level after a brief touch above it yesterday. Upward momentum still dominates the daily chart, keeping focus on upside extensions. However resistance is expected to hold in the short term.
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