Article by: ETO Markets
Oil prices have paused their recent slide and settled into a tense equilibrium, underpinned by a mix of tightening supply in the United States, looming production increases from OPEC+, and cautiously improving demand prospects abroad. In the U.S., a fall in active rigs reported by Baker Hughes initially suggested slackening demand, yet subsequent API and EIA data revealed inventory drawdowns—most notably a nearly 4.5-million-barrel drop—indicating that production has not kept pace with consumption, thereby lending support to prices. Conversely, OPEC+ surprised markets by approving a 411,000-bpd output hike in June—led by Saudi Arabia, Russia and other members—which briefly dragged Brent below $60 and pushed WTI toward $55 and remains a bearish overhang should further supply increases materialize. On the demand side, signs of a manufacturing rebound in Europe and China, coupled with the prospect of an imminent U.S.–China trade deal, have bolstered hopes for stronger oil consumption; should those expectations firm, they may provide an additional floor under prices. Collectively, these fundamental factors suggest that while price momentum is fragile, tightening U.S. supply and a firmer global demand outlook could prevent a renewed freefall—though OPEC+’s planned supply surge continues to temper bullish sentiment.
Gold dipped into the $…–… area early Friday in Asian trading but found enough dip-buying to snap a two-day slide, rallying to around $… on renewed safe-haven demand amid heightened Russia–Ukraine hostilities, Middle East tensions and India–Pakistan border skirmishes. A modest pullback in the U.S. dollar from a near one-month peak added fuel to gold’s advance, though lingering Fed hawkishness and easing U.S. recession fears continue to underpin the dollar and cap gold’s gains. In addition, optimism around a U.S.–U.K. trade deal—which maintains a 10% levy on most British imports—and the prospect of U.S.–China tariff talks over the weekend have reduced pressure on the dollar, further limiting bullion’s upside. Market participants are also bracing for remarks from key Fed officials later today, seeking fresh clues on the timing of future rate cuts; any indications that the Fed will delay easing could reignite dollar strength and weigh on gold, even as geopolitical jitters keep the metal on course for modest weekly gains.
From a technical perspective, the recent breach of the former $… pivot and the drop below $… have tilted the technical scales in favour of XAU/USD bears, yet daily oscillators—while waning—have not fully validated this downside pressure, advising caution before committing to fresh shorts. Initial support is likely to emerge around $…–…; a decisive break there could open the path to the intermediate $…–… zone and potentially last week’s low near $…. On the upside, the Asian-session peak near $… now serves as immediate resistance, with further advance capped at $…–…; only a sustained move beyond that level would shift momentum back toward $… and ultimately challenge the weekly swing high around $…–….
West Texas Intermediate (WTI) crude slipped to around $59.80 a barrel in Asian trading on Friday after rallying nearly 4% the day before, as hopes for easing trade tensions between the U.S. and China—and a “breakthrough” U.S.–U.K. deal to cut U.K. tariffs on American goods from 5.1% to 1.8% (with the U.S. reciprocating on British autos)—fueled the prior session’s gains. Treasury Secretary Scott Bessent is due to meet China’s Vice Premier He Lifeng in Switzerland on May 10 to tackle lingering disputes that have weighed on global oil demand. Offsetting this bullish momentum, OPEC+ remains set to boost production—despite a modest April output dip as lower output in Libya, Venezuela, and Iraq offset planned increases elsewhere—while U.S. sanctions on two small Chinese refiners accused of buying Iranian crude have disrupted their operations (prompting them to rebrand product sales) in a bid to curtail Tehran’s oil revenues and press for renewed nuclear talks. With trade relief supporting prices even as supply-side increases and sanctions-driven market strains persist, WTI is caught between competing forces that may keep it in a narrow trading range.
From a technical perspective, WTI continues to hover around its near‐term support at $…, having briefly dipped below this level on Monday before recovering into a sideways range. The 14-day RSI remains between 30 and 50, signaling persistent bearish bias, so if sellers regain control we could see a decisive break beneath $… and an accelerated slide toward the next support at $… and, if that fails, $…. Conversely, a shift in momentum to the upside would need a sustained push above $… to invalidate the bearish case, at which point $… becomes the next logical resistance target. For now, the market appears trapped between these key levels, waiting for a catalyst to break the stalemate.
