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As oil struggles, gold looks brighter and sugar sweeter

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Although there’s talk of the oil price stabilising it’s been another terrible week for crude. That’s been partly offset by a brighter performance in precious metals as well as softs like coffee. 

Saxo's Head of Commodity Strategy, Ole Hansen, doesn't believe any resitance levels have been reached in crude. He does though believe Brent could go as high as USD 53 in the near-term and WTI could revisit the USD 50 level.

Hansen notes that in the US, the oil rig count has dropped by 8% in three months. He says it could come down further as the market bottoms out, but he thinks it's still too early. But he notes that investors are now buying energy stocks. He would look at call options, most notably the WTI Crude June USD 70 which is trading around 65 cents.

Meanwhile gold continues to hold up against a strong dollar as does silver. Softs too have had a good week, but Hansen notes that's down to the hot weather particularly in Brazil and Ivory Coast.