Brent crude prices may stay supported — for now

Dubai: Brent crude prices may stay supported for now even as a weaker dollar helps gold to gain more lustre.

On Friday, Brent crude settled up 11 cents at $66.81 (Dh245) per barrel. On a weekly basis, Brent was up in five of the past six weeks.

“For now no major technical levels have been broken and both Brent and WTI crude remain supported. Fundamentals which remain non-supportive at this stage will eventually take control but for now the positive technical outlook may continue to support prices in the near term,” Ole Hansen, Head of Commodity Strategy at Saxo Bank.

However, over a medium term, crude oil prices looks weak due to higher supplies.

The International Energy Agency said this week that key producers in Opec are pumping at least 2 million barrels per day (bpd) more than required.

The US. Energy Information Administration says world stocks are rising at 1.95 million bpd this quarter and will build at least through 2016.

The oil market remains oversupplied nearly a year after the sell-off in crude began last summer, knocking prices off highs above $100 a barrel.

“I don’t see crude oil sustaining current gains as inventory levels are far too high and also we are getting closer to an Iranian deal,” Pradeep Unni, senior relationship manager, Richcomm Global told Gulf News.

Iranian deal may add a surplus of 1 million barrel per day to the market, analysts said.

Brent crude may retrace to $63 per barrel, though weakness in the dollar would keep the downside limited, Unni said.

Gold to gain

“Gold may hit a new high and hit a resistance level of $1,251 an ounce this month,” Osama Al Ashri, member of British organisation, Society of Technical Analysts said.

On Friday, international spot gold ended 0.30 per cent higher at $1,224.80 an ounce.

There could be buying momentum in gold on the physical market leading to stability in prices, Unni said.

Gold may hit a high of $1,300 an ounce due to weaker dollar, Unni said, but these prices are still down from its historic high of around $1,900.

Sputtering growth has taken the lustre off the dollar’s rally in the past month, boosting demand for bullion as an alternative.

“I’m more bullish on silver more than gold and may hit a target of $18 an ounce by next few months, Unni said.