COMMODITIES: Yesterday's Sell-Off Strengthens a Bearish Theme for WTI
A sell-off in WTI futures yesterday, strengthens a bearish theme. A continuation lower would pave the way for a move towards key support and the bear trigger at $55.96, the Oct 20 low. Clearance of this level would confirm a resumption of the downtrend. Note that it is still possible a bullish corrective cycle remains in play. Resistance to watch is $62.59, the Oct 24 high. A breach of this hurdle would signal scope for a stronger correction. The downleg in Gold since Oct 20 appears to have been a correction and the move down has allowed an overbought condition to unwind. Recent gains suggest that correction is over. A key support at the 50-day EMA, at $3910.9, is intact. Clearance of this EMA would signal scope for a deeper retracement. Initial resistance is $4264.7, a Fibonacci retracement. A stronger recovery would open $4381.5, the Oct 20 high and bull trigger.
- WTI Crude down $0.28 or -0.48% at $58.21
- Natural Gas down $0.04 or -0.97% at $4.486
- Gold spot up $37.59 or +0.9% at $4233
- Copper up $2.1 or +0.41% at $512.5
- Silver up $0.88 or +1.66% at $54.1323
- Platinum up $9.73 or +0.6% at $1627.97
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BOE: ILTR Usage Sees Another Notable Pickup
- The ILTR take up this week was GBP6.344bln - surpassing the GBP5.085bln seen two weeks ago - and the highest level since the week of the first Covid lockdown. This is also the largest net weekly increase in ILTR usage in that time - increasing by GBP5.004bln. All bids were accepted by the BOE with no increase in clearing spreads above the minimum levels.
- Assuming unchanged STR usage on Thursday (which cannot be assured after 3 of the last 4 weeks saw drops in usage), this would put repo balances at a new record high for the week of GBP124.4bln.
- We think that ahead of the change to the ILTR spread for Level A collateral changing from Bank Rate +0bp to Bank Rate +3bp in November (date still TBC) that 6-month repo rates are getting locked in now.
