Oil Continues Its Way Up

Oil continued on its upward journey as it broke through its range top at 47.6 and hit the resistance at 48.6 before the sellers pushed it down hard back towards 47.6 again and it sits at 47.95 yesterday. We had mentioned that the brokering of a deal at the OPEC meeting in Algiers would be good for Oil prices and could lead to a bullish run in the Oil prices and thats what we got yesterday. The details of the agreement are yet to be worked out and we believe that it could turn out to be very tricky and difficult to convince specific producers on how much they should be cutting down on their production. But till the details emerge or till news of the difficulties come out, oil will continue to enjoy the sunshine helped by fears of risk regarding European banks, fears which usually see funds moving into safer instruments like the commodities.

We saw a similar thing yesterday as well as the Deutsche bank fears dominated the markets during the US session and this caused a spurt in price of Gold which is considered as a safe haven whenever there is a talk of risk. Gold took a trip back to its support at 1317 during the early part of the day but recovered on the bank fears and sits at 1324 as of this writing. If the bank fears continue, it will further help gold prices and we could see gold heading towards 1330.

Silver, on the other hand, did not seem to be concerned by any of this and had a generally mixed day and ended the day fairly unchanged and sits close to the support at 19.11 as of this writing. If the bank fears continue, expect silver to respond as well and we could then be in a bullish run in all the commodities. Its the month end and the weekend today and the liquidity generally dries up as the day progresses which could affect the volatility. Trade safe!