Crude Oil Prices Seesaw On Conflicting News, US Tax Plan On Tap

Crude oil prices seesawed as conflicting catalysts stoked volatility only to settle little-changed by yesterday’s session close. A move higher triggered by news that a fire took the Shell Echilada-Salsa platform offline was countered by EIA inventory data that showed stockpiles unexpectedly added 2.24 million barrels last week. The same report also put US output at the highest in over 30 years, compounding selling pressure.

Meanwhile, gold prices edged up as the US Dollar slipped, boosting the appeal of anti-fiat assets. The greenback stumbled amid uncertainty about the fate of a US tax cut effort championed by President Trump that markets expect will stoke inflation and inspire a steeper Fed rate hike path next year. The Senate version of the plan is due today, with the outcome likely critical for USD and thus the yellow metal too.

As for oil, a lull in relevant top-tier news flow may put sentiment trends in control. A near-term corporate tax cut may be cheered by Wall Street, sending cycle-sensitive crude prices higher amid a broad swell in risk appetite. Alternatively, an underwhelming Senate proposal that cools hopes for a dose of expansionary fiscal policy in the near term might produce the opposite results.

GOLD TECHNICAL ANALYSIS – Gold prices remain stuck in a choppy congestion range. Breaking above the 23.6% Fibonacci expansion at 1283.22 on a daily closing basis paves the way for a retest of the 14.6% level at 1291.92. Alternatively, a push below support in the 1266.41-69.10 area (trend line, 38.2% Fib) sees the next downside barrier at 1257.69, the 50% expansion.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to mark time below resistance at 57.57, the 38.2% Fibonacci expansion. Breaking above that on a daily closing basis targets the 50% level at 58.71. Alternatively, a turn back below the 23.6% Fib at 56.17 opens the door for a retest of resistance-turned-support at 55.24, the January 3 high.