Fundamentals, Oil & Gold

Crude Oil, Precious Metals Position to Extend Losses

Commodities – Energy

Crude May Rebound on BP Earnings But Technicals Point Lower

Crude Oil (WTI)       $78.79        +$0.11       +0.14%
As we argued yesterday, crude prices continued lower after capitulation below the $80 level to pause just above the $78 mark. A Bearish Engulfing candlestick formation has been formed and is hinting at continued downside ahead, with the next level support lies just below the $77 level. On the fundamental side of things, European equity futures are trading higher after UK oil giant BP Plc posted better than expected earnings for the third quarter, which bodes well for WTI contract both and may help force a re-test of the $80 level before downside momentum resumes.

Commodities – Metals

Gold, Silver Break Lower Out of Trading Ranges, Further Declines Ahead

Gold       $1042.82       +$4.32       +0.42%
Gold prices have dropped below the boundaries of the range that had contained prices in October to find interim support just above $1037.03. Prices appear set to re-test the broken channel bottom, with a return to bearish momentum from there to see the next level of support above $1020.40. The trajectory of equities and the US Dollar are likely to be the primary drivers in the day ahead: earnings from Daimler AG still on tap in Europe while profits reports from US Steel, AK Steel, and Valero as well as consumer confidence figures set for release in the States.

Silver       $17.15       +$0.08       +0.45%
The technical picture for the lesser precious metal has mirrored that of gold, with prices breaking below the range that held since the beginning of the month at $17.25 and now retracing to re-test that level. From here, the door looks open for a move to test $16.75, the 9/30 swing high. Fundamentally, the broad trajectory of risk sentiment is likely to dominate.