Crude Oil Prices Rise on OPEC Maneuvering But Rally May Stall

• Crude oil prices rose most in two months on OPEC maneuvering
• EIA inventory data may undermine momentum if API proves right
• Gold prices try to rebound but Fed-speak may cap follow-through

Crude oil prices posted the largest daily advance in nearly two months amid reports that OPEC members are scrambling to finalize the implementation details of an output cut deal struck in September. The cartel’s Secretary-General Mohammed Barkindo said members are fine-tuning the arrangement as he shuttled between meetings with producers to secure agreement before a formal meeting on November 30.

Barkindo will hold informal talks with Russia – a major non-OPEC supplier whose participation is seen as critical to any output deal’s success – this week in Doha. Saudi Oil Minister Khalid al-Falih will reportedly be attendance as well.

Looking ahead, weekly EIA inventory data is in focus, with expectations suggesting stockpiles grew by 596k barrels. A private-sector estimate from API published yesterday pointed to a much larger gain of 3.65 million barrels. The WTI benchmark may turn lower if this proves to foreshadow an upside surprise on official figures.

Gold prices corrected higher yesterday after dropping to the lowest level in five months. Follow-through seems unlikely against a decidedly negative fundamental backdrop however. The priced-in probability of a Fed rate hike in December edged up to 94 percent yesterday and the expected 2017 tightening path continues to steepen. Upcoming Fed-speak may bring this narrative back in focus, sending the metal lower.

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GOLD TECHNICAL ANALYSIS – Gold prices continue to digest losses after hitting a five-month low above the $1200/oz figure. From here, a daily close below the May 30 bottom at 1199.55 opens the door for a test of the 123.6% Fibonacci expansion at 1171.83. Alternatively, a reversal back above the 76.4% level at 1234.97 targets the 61.8% Fib at 1254.50.

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices launched higher as expected having found support near the $43/bbl figure once again. Near-term resistance is now at 45.90, the 38.2% Fibonacci retracement, with a break above that on a daily closing basis targeting the 50% level at 47.05. Alternatively, a reversal below triple bottom support at 43.02 exposes the August 11 low at 41.08.