Oil prices continue to rise as US launch attacks on rebel groups
Fundamental outlook
WTI Crude prices continued to rise, reaching US$74 per barrel on Friday. US military launched its fifth airstrike at Yemen’s Huthi rebels. Iran-backed militants retaliated by firing back missiles in Red Sea, hitting a US-owned tanker.
US retail sales gained 0.6 per cent in December, surpassing consensus’ expectations. Excluding auto sales, core retail sales rose 0.4 per cent in the same month, higher than expectations.
The China’s GDP for final season of 2023 grew 5.2 per cent, slightly below consensus’ expectations. On quarterly comparison, its GDP gained 4.9 per cent in 3Q last year. Industrial production rose 6.8 per cent in December, matching expectations.
UK’s inflation gained 4.0 per cent on an annual basis in December, exceeding expectations. Core inflation rose 5.1 per cent, driven by a rise in demand for alcohol and tobacco.
UK retail sales plunged to minus 3.2 per cent in December, worse than expectations. The figure dived into its deepest negative data since December 2021. This deep contraction suggests a recession might hit UK soon.
Technical forecast
US dollar/Japanese yen traded in technical recovery last week with support resting at 145. We reckoned the market might reach 149 before falling from this region. The overall range is expected to trade from 146 to 148.50 amid mixed sentiment.
Euro/US dollar behaved in a weak trend last week. The market might be prone to trade lower with resistance acting on 1.095. The downside target is expected at 1.075 whereas the overall range might be contained within the 200 pips.
British pound/US dollar traded sideways last week but gradually showed a weakening pattern. We outline the trend might be bearish while contained within 1.25 to 1.275. Beware of piercing above the 1.275 resistance in case of unexpected news that might surprise short traders.
WTI Crude prices stayed on US$71 per barrel support and finished the week above US$74 per barrel. We forecast the market might move into a consolidation and trade within US$71 to US$75 per barrel. Piercing above US$75 per barrel resistance might lead to a new buying force rising up to US$78 per barrel. Risk caution is reminded as unexpected fundamentals might occur anytime from the conflict on the Red Sea.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives rose last week from RM3,800 per metric tonne, tailing the crude oil ascension. The market has more potential on the upside in the near future. April 2024 contract closed at RM3,940 per metric tonne on Friday. We forecast the support might lie at RM3,850 per metric tonne and likely to ascend to RM4,050 per metric tonne as our next target. Beware of some correction towards the end of this week.
Gold prices moved into a correction last week as we predicted. We foresee the trend might remain bearish and trade within US$2,000 to US$2,040 per ounce. Beware of breaking beneath US$2,000 per ounce support that might lead to US$1,980 per ounce as our next support area.
Silver prices topped US$23.50 per ounce resistance last week and fell. We predict the bears might continue to trigger selling pressure in the market. The market range is targetted at US$22 to US$23 per ounce. Breaking beneath US$23 per ounce might lead to lower grounds at US$21.50 per ounce.