Crude Oil and Silver Analysis: Key Levels to Watch

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By :  ,  Market Analyst

  • Crude Oil drops to three-month lows
  • Silver rebounds from key 2020 levels
  • U.S ISM Manufacturing Indicator drops lower, ISM Services next in sight

The weekend’s OPEC meeting revealed mixed interests and decisions, reflected in the ranging price action on crude oil charts. Besides the agreement to extend the 2-million-barrel per day supply cut until October, the UAE was granted an increase in production by 300,000 barrels per day to compensate for its significant investments in oil projects. However, concerns arise as agreed quotas were previously breached by Russia and Iraq for war funding and economic support.

Leading Economic growth and activity metrics are in sight

The U.S. ISM Manufacturing PMI dropped further below expansion metrics today towards 48.7, adding concerns to overall demand potential. Next in sight are the ISM Services PMI (Wednesday) and Non-Farm Payroll (Friday) to provide further clarity on the growth outlook of the U.S. economy. These metrics can play a leading role in determining oil demand potential and price trends alongside supply policies and inventory measurements. In terms of Silver, a growth outlook combined with easing inflationary levels would favor its demand for industrial purposes. The latest Core PCE figure traced a decline from 0.3% towards 0.2% last Friday, aligning with potential Fed rate cut decisions.

Technical Analysis

Crude Oil Analysis: Daily Time Frame – Logarithmic Scale 

Crude Oil Analysis USOIL_2024-06-03_18-55-44

Crude Oil is trending below 75 for the first time in three months, weighed down by negative fundamental momentum. The sideways expanding range of the month of May finally took a dominant direction after breaking below the 75.50 level. Current prices touched down at the 74.30 low, completing the head and shoulders price target. Breaking below 74, the price track can meet with levels 73.30 and 71 respectively, prior to retesting yearly lows. A rebound from the current low can meet resistance levels near the 76 zone.

Silver Analysis: Daily Time Frame – Logarithmic Scale

Silver Analysis XAGUSD_2024-06-03_15-59-18

After reaching the 50% Fibonacci extension from the 2008 low, 2011 high, and 2020 low, silver retraced to the key 30-29 barrier, marked by a $29.78 low. This level is significant, and a bullish rebound could push prices back to $31.50 and $32.50. On the downside, a break below $29.78 could find support near $28.80 in the short term and $26 in a more extreme scenario.

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