20.01.2022: Oil remains near highs, gold edges up - Outlook for Brent, USD/RUB, GOLD.
After hitting its highest level in more than seven years on Tuesday, oil went negative yesterday. This may indicate both a correction in the trading instrument and new fears in the light of the worsening epidemiological situation. The point is that Europe has reported a surge in infections, and many investors are now concerned over a possible introduction of tighter lockdown measures. Furthermore, market participants are still worried about potential fuel shortages. Turkey's pipeline that had been knocked out by an explosion was fully restored. However, this fact raised fears of the deteriorating situation in the Middle East. In addition, a number of OECD countries posted a decrease in inventories in November. Preliminary data for December show OECD industry stocks falling as well. Limited crude production volumes are accompanied by growing demand. On Wednesday, the International Energy Agency said that it revised up its global oil demand estimates for 2022 by around 200,000 barrels per day. Thus, on the one hand, the situation in the oil market suggests possible shortages. On the other hand, global coronavirus statistics raise the issue of a potential fall in demand due to the introduction of new restrictions.Brent crude oil futures have entered a technical correction. The asset is currently drifting between the levels of $87.50 and $89 per barrel. The phase of stagnation has started at the peak of the trend. This indicates that bullish sentiment among speculators continues to dominate. If the price breaks above the level of $89 per barrel, Brent crude will most likely head for the psychological level of $90 that is of great interest to many traders. As for the foreign exchange market, the ruble managed to advance slightly on Wednesday. The dollar/ruble pair has been showing surprisingly high volatility lately. Yesterday, the US dollar dropped by almost one ruble. Today, it has already gained almost half a ruble. Such dynamics suggest that the main driver of the asset is speculation. Clearly, the ruble is being supported by the commodity market and surging oil prices, while geopolitical tensions act as its constraining factor. The statements of the foreign ministers on continued talks between Russia and the United States calmed the market, while Biden's speech at a press conference caused stir in the market. Now the world is mulling over the statement of the US President. Thus, growing fears of the escalation of the conflict severely limit the ruble’s growth potential. Until the situation stabilizes, the Russian currency will hardly gain value. From a technical point of view, the dollar/ruble pair once again rebounded from the resistance area of 77.00-77.35 rubles per dollar. This led to a short-term sideways movement around the levels of 75.60 and 77 rubles. In this situation, the best trading tactic is to use a breakout strategy. If the price consolidates above 77.53 rubles per dollar, the ruble is expected to extend weakness. If the price fixes below the 75.60 mark, the Russian currency will have a chance of recovering. Gold has finally overcome the psychological level of $1,830 per barrel. Notably, the precious metal has repeatedly tried to reach this height since the end of last year, but each attempt was futile. And now, when gold's growth potential seemed to have been exhausted, the asset rushed up. It is difficult to say what exactly contributed to such an impressive upward movement in the asset. In periods of instability, investors always shift their focus to safe-haven assets. Indeed, the already uncertain market situation was exacerbated by a surge in coronavirus cases. Against this background, gold prices may well continue to edge higher. Yesterday, gold futures managed to add 1.5%, broke through the resistance level of $1,830 per ounce, and consolidated above $1,840. Thus, if the price is able to stay firm above $1,850 on the daily chart, gold will most likely extend gains, approaching the local high posted on November 16 and the level of $1,877 per ounce. Subscribe to our channel and stay tuned to the latest news! Have a profitable trading day! See you soon!
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