WTI Oil Rebounds On China Optimism

Key Insights

• China’s decision to continue reopening the economy despite coronavirus-related problems provided material support to commodity markets. 
• Natural gas gained ground amid profit-taking. 
• Gold tested new highs as U.S. dollar declined to multi-month lows against a broad basket of currencies. 

WTI Oil Tested Resistance At The 20 EMA

WTI oil made an attempt to settle back above the $76 level as traders focused on the reopening of China’s economy. China has swiftly abandoned its zero-COVID policy, and traders bet that the country’s demand for oil will grow at a robust pace despite temporary problems with coronavirus.

The U.S. dollar tested multi-month lows, providing additional support to commodity markets. The nearest significant resistance level for WTI oil is located at the 20 EMA at $76.70. A move above the 20 EMA will push WTI oil towards the resisance at $77.50.

Natural Gas Attempts To Settle Back Above The $4.00 Level

Natural gas moved back above the $4.00 level as traders continued to take profits after the strong pullback. The weather stays warm, which means that current demand for natural gas will stay at very low levels.

Weather forecasts indicate that weather may be colder closer to the end of month, which may provide some support to natural gas markets. However, longer-term weather forecasts are always volatile, so market sentiment may shift quickly if forecasts change.

Gold Tests New Highs

Gold is testing new highs near the $1880 level as U.S. dollar retreats against a broad basket of currencies. A move above the $1880 level will open the way to the test of the resistance at $1900.

Interestingly, weaker dollar did not provide material support to other precious metals. Silver made an attempt to settle above the $24.00 level but failed to develop sufficient momentum and pulled back. Platinum remains stuck near $1100, while palladium declined towards $1765.

Copper Rallies As Traders Bet On Rising Demand

Copper rallied above the $4.00 level amid optimism about the reopening of China’s economy. China continues to reopen despite coronavirus-related problems. In addition, the country is ready to provide material support to its economy, which is bullish for copper markets.

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