Commodities are under pressure in European trade ahead of the opening bell on Wall Street. Firm directional conviction seems absent for now however and the relative quiet is likely to carry forward was traders hold off on committing to a clear-cut directional bias ahead of Friday’s closely-watched US employment data. Indeed, S&P 500 futures are trading effectively flat, suggesting the selloff does not have a firm grounding in risk appetite trends.
In that context, current weakness in most benchmark commodity prices seems broadly corrective after yesterday’s gains. Crude oil is a notable exception, where a third day of losses may reflect a reduction in geopolitical risk premium amid news of calming tension in Egypt. Negotiations surrounding a deal to avoid the US “fiscal cliff” remain a wild-card. Signs of progress on a compromise are likely to be supportive for sentiment as well as commodity prices, and vice versa.
Comex E-Mini Copper (NY Close): $3.677 // +0.020 // +0.03%
Prices are testing resistance at 3.676, the 50% Fibonacci expansion, having edged above a falling trend line set from the Sept. 14 swing high. A break higher targets the 61.8% level at 3.742. Trend line resistance-turned-support is now at 3.654, with a drop below that targeting the 38.2% expansion at 3.612.
WTI Crude Oil (NY Close): $87.86 // -0.49 // -0.01%
Prices put in a Shooting Star candlestick below resistance at the 23.6% Fibonacci expansion (89.48), a barrier reinforced by a minor rising channel top at 90.60, hinting a move lower is ahead. Near-term support is at 87.42, the 14.6% Fib, with a break below that exposing the channel bottom at 85.61 as well as the Nov. 7 low at 84.04. Alternatively a break above 90.60 exposes the 38.2% expansion at 92.87.