Most significant news of the week was Nymex Light Crude breaking resistance at its two-year high of $54.50/barrel, signaling a primary advance. Retracement that respects the new support level would confirm the up-trend.
The next major resistance level is at $60/barrel, shown on the 5-year chart below.
The breakout follows Brent crude’s earlier breakout above $55, signaling a primary up-trend.
Crude prices are a major factor in commodity prices due to the high energy costs of extraction (hard commodities), cultivation (soft commodities) and transport (both hard and soft). Rising crude prices are likely to cause a broad rise in commodity prices, with the DJ-UBS Commodity Index testing resistance at 90.
Iron ore is more susceptible to cycles in the Chinese real estate market but is likely to find support above $50/tonne if crude prices rise.
Even gold would be likely to benefit as gold and crude prices tend to rise and fall in unison over the long-term.