OPEC Leaves Production Unchanged
Crude Oil – Crude Oil futures are up over a 1.50 in early trading and closing in on the $90 mark on news that OPEC will leave production unchanged, a decision was heavily influenced by global economic uncertainty in 2008. Believing that the market is already well-supplied, the cartel was concerned that increased production could create a glut and drive prices lower. Today's weekly inventory numbers are expected to show a decline in Crude Oil of 700,000 barrels for the week ending November 30th, while gasoline inventories are expected to rise 700,000 barrels and distillates are forecast to drop 400,000 barrels. January Crude has held the 50-day moving average, signaling that the market has found some technical support in the near-term. The pattern on the daily chart suggests that this is a consolidation period before more declines. Tempering this view, the momentum indicator is beginning to outpace RSI, which is bullish in the near-term. The RSI came in oversold, which could offer further technical support. Support comes in at 87.15 and 84.00, while resistance can be found at 90.00 and 93.00.
NASDAQ – Stock index futures are higher in spite of the OPEC news this morning, after declining the two previous trading sessions. The rebound is led by chip manufacturers, as the DRAMexchange Index posted five consecutive gains. Higher chip prices will likely lead to improved profits for semiconductor makers, and traders have begun value-buying in the tech sector. The market is still looking for the Fed to cut interest rates next week to bolster the economy, helping to offset the likelihood that energy prices will climb due to the OPEC decision. The December e-mini NASDAQ bounced off of support at 2050 and the market is holding above both the 9- and 18-day moving averages. The two moving averages had a bullish crossover yesterday – despite the declining market – which could offer some near-term strength. Momentum is showing bearish divergence from the RSI, possibly offsetting the bullish MA crossover. Support comes in at 2050 and 2000, while resistance can be found at 2100 and 2130.
Gold – Gold futures are higher for the third consecutive trading session, aided by higher energy prices. Climbing energy costs and a good chance of another Fed rate cut next week could create an inflationary scenario for the U.S. economy, leading to higher demand for commodities – specifically precious metals. The USD has rebounded slightly in recent days on news that policy makers in the U.S. and Europe will step up their efforts to prevent subprime losses from spreading. Extended rallies in the greenback could put some downward price pressure on the precious metals market. February Gold rebounded before reaching the $780 mark, which would have been the trigger line to confirm a double top reversal. This was also in the area of the 50-day moving average. The market has been reluctant to move above the 9- and 18-day moving averages in the early going, and momentum is beginning to lag behind RSI – two bearish near-term signals. Support comes in at 800 and 780, while resistance can be found at 815 and 835.
Rob Kurzatkowski, Commodity Analyst
