Commodities - Energy

Crude Oil Rises on Supply Fears

Crude Oil (WTI) - $91.98 // $0.21 // 0.23%

Commentary: Crude oil surged on Monday, as a continuation of the unrest in Egypt kept the market on edge. WTI added $2.85, or 3.19%, to settle at $92.19, while Brent rose by $1.59 or 1.6% to settle at $101.01, a 28-month high.

While it looks like the situation in Egypt will resolve relatively peacefully (even in the event of regime change) the very fact that there is the risk of significant disruption to oil flows has allowed prices to bust through the key $100 level for the first time in over two years.

OPEC's resistance to increasing production quotas has been an extremely bullish factor for prices. It remains to be seen whether this move above triple digits will spur a response from the cartel, but the silence is only adding to the extremely bullish momentum.

Technical Outlook: Prices are bouncing from rising trend line support ($88.58) to challenge the top of an upward-sloping channel that has guided crude higher since June (now at $94.43), but clear negative RSI divergence hints the bulls are running out steam and a bearish reversal is ahead. A push through the aforementioned rising trend line initially exposes the channel bottom, now at $81.86.

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Commodities - Metals

Gold Falls as Correction Resumes

Gold - $1337.72 // $4.92 // 0.37%

Commentary: Gold shed $3.95, or 0.3%, to settle at $1332.80 as some of the geopolitical risk premium came out of prices. In the bigger picture, gold remains in correction mode thus traders are likely looking at rallies as selling opportunities. There is no let up in the liquidation that is taking place in ETF holdings, which reached 65.3 million troy ounces, the lowest in eight months.

Technical Outlook: Prices are testing the upper boundary of a falling channel that has guided the way lower since the beginning of January, a barrier reinforced by the 38.2% Fibonacci retracement level at $1352.49. A break above here exposes the 50% Fib at $1366.15. Alternatively, renewed downward momentum sees initial support at $1308.25.

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Silver - $28.24 // $0.18 // 0.63%

Commentary: Silver managed to eke out a gain of $0.08, or 0.28%, to settle at $28.06. Silver has been holding up relatively well considering the moves that we've seen in gold.

The gold/silver inched lowerto 47.4, but remains above the four-year low near 46 set late last year. (The gold/silver ratio measures the relative value/performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance)

Technical Outlook: Prices are testing the top of falling channel that has led the way lower since early January, now at $28.33, with a break higher clearing the way for an advance to the $30.00 figure. Alternatively, renewed selling sees initial support at $26.71.

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