FXStreet reports that Bart Melek, Head of Commodity Strategy at TD Securities, notes that OPEC+ stuck to their plan to cautiously raise output as expected but stopped short of discussing what comes next after July. Considering demand is projected to grow at a fast clip, the market is set to face a considerable deficit during the next six months under these assumptions. The group's cautious return to the market, Iranian production notwithstanding, has created the set-up for $70+/bbl crude.

“OPEC+ kept to its widely expected plan to increase production in July, as the Saudi-led cartel sounded a bullish note on the global oil demand recovery.”

“Given demand is projected to grow by over 5 million b/d in H2-2021, there will likely be a considerable deficit during the next six months. Since the OPEC+ planned supply will not keep up with demand growth, it could be argued that the producer group will likely increase production once these risks are mitigated, as we believe they want to regain their market share and do not want a price spike which would incentivize US shale producers to grow output or destroy demand. But any supply increases won't be announced until the Iran production issue has clarity.”

“We expect that the global oil market will remain in a sizable deficit over the near term, which is price supportive. As such it is reasonable to say that WTI will likely push through the low $70s/bbl, but won't surge much higher on a sustained basis, as currently sequestered OPEC+ capacity gets redeployed and Iran increases output.”

FXStreet reports that gold has charted a key day reversal as the yellow metal is seeing some profit-taking. Subsequently, XAU/USD is expected to correct lower short-term, in the opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank.

“Gold’s high of $1916.91 has not been confirmed by the daily RSI and in fact, yesterday’s price action constituted a key day reversal.” 

“We look for a correction lower to take hold and would allow for some slippage back to $1844, the short-term uptrend and the 200-day ma at $1842.” 

“The 55-day ma at $1794 is expected to be the maximum downside we see and we then look for resumption of the long-term uptrend.”

“Longer-term, we target the $1959/65 November 2020 high and the 2021 high. These guard the 1989/78.6% retracement and the 2072 2020 peak. Longer-term, we believe that this will also be overcome.” 

FXStreet reports that strategists at Credit Suisse note that Brent crude looks to be close to breaking above the 2020 and YTD 2021 high at $71.38/75 for the completion of a “triangle” continuation pattern and a resumption of its core bull trend.

“Brent Crude is retesting resistance from the $71.38/75 highs of 2020 and 2021. A break above here should mark the completion of a fresh bullish ‘triangle’ continuation pattern for a resumption of the core bull trend for a move to the 2019 high at $75.60, then the ‘measured flag objective’ at $79.10.” 

“Support is seen at the 63-day average at $66.64, which ideally holds.”