Under Pressure
Crude Oil – Oil futures have given back some of yesterday's gains on expectations that today's EIA number will show builds across the board. Crude Oil inventories are expected to climb by 2.5 million barrels, while gasoline and distillate inventories are expected to show builds of 1 million barrels each. Geopolitical events have been the wild card of late, sparking rallies despite the fact that the U.S. has been stockpiling petroleum. Traders are also concerned that global diesel demand may outstrip supplies due to high demand from Asia and South America. The U.S. Dollar has not been much of a factor in recent trading sessions, holding relatively steady against the majors, but a sharp move either way could bring it into play once again. June Crude Oil remains technically positive, forming a bullish consolidation pattern on the chart. Sell-offs below the $120 a barrel mark may be needed to spark heavy selling. Momentum is sharply lower despite yesterday's rally, suggesting the market may be vulnerable the selling pressure. Support comes in at 123.61, 121.41 and 119.73, while resistance can be found at 127.49, 129.17 and 131.37.
Gold – Precious metal prices have not been able to benefit from the rise in energy prices to mount sustained rallies. The Dollar has made strong gains against the Euro in recent weeks, diminishing the value of Gold as a hedge against the weak greenback. The Fed, ECB and BOE have been talking up inflation in recent weeks, suggesting they may soon be taking steps to curb rising prices in their respective jurisdictions. Today's CPI report is expected to show inflation holding steady, with an upside surprise likely to be negative for precious metal prices, as it would hint toward further action by the Fed. June Gold remains technically weak on the chart, failing to rally above the $900 mark. Yesterday's slide triggered a downside breakout from a pennant on the chart, suggesting more downside may be in the cards. Momentum has dropped at an even faster pace than price and RSI, seemingly backing up the bearish chart pattern. Support comes in at 858.30, 846.90 and 832.50, while resistance can be found at 884.10, 898.50 and 909.90.
Euro – The Euro continues to lose ground on the U.S. Dollar, much to the liking of many EU officials. Financial ministers in several member states have viewed the strong Euro as a barrier to growth, sparking inflation and making the union's exports less competitive. While the ECB held rates steady at their last meeting, many analysts are still somewhat biased toward a rate cut in the future, while the Fed is expected, at the very least, to keep rates steady. Technically, the June Euro chart has been eerily similar to the Gold chart in recent weeks, with the market forming a bearish consolidation pattern. Unlike Gold, this pattern has not been validated, but momentum has taken a sharp turn lower, suggesting a larger breakdown may be in the works. Support comes in at 1.5392, 1.5330 and 1.5255, while resistance can be found at 1.5529, 1.5604 and 1.5666.
Rob Kurzatkowski, Commodity Analyst
