WTI off-3-week tops, drops back below $ 63.50
- Retreats as USD selling stalls.
- Headed to 5-DMA at $ 63.01.
- Saudi news still underpins.
After a brief consolidative stint near three-week tops of $ 63.85, WTI (oil futures on NYMEX) met fresh supply and wiped-out gains to now trade neutral near the midpoint of the 63 handle.
The reversal in oil prices is mainly driven by omnipresent oversupply worries, as the US cruse exports near a record high of 2.1 million hit in October last year, which could very well undermine the efforts made by the OPEC and non-OPEC producers to bring the oil markets into rebalance.
More so, a minor bounce staged by the US dollar versus its main competitors and increased US oil rigs count also adds to the latest leg down in the barrel of WTI.
However, the losses appear limited as the sentiment around oil still remains underpinned by Saudi Arabia’s Energy Minister Al-Falih’s comments, citing that the Kingdom will maintain oil output levels well below the output caps.
Further, in an evidence of increased confidence in the commodity, hedge funds and money managers upped their bullish wagers on WTI for the first time in four weeks, the CFTC data showed last Friday.
Focus now shifts towards the weekly crude supplies data due out this week from the US for the next push higher in oil. In the meantime, the USD dynamics will play a key role, in the wake of the Fed Powell’s testimony due tomorrow.
WTI Technical Levels
At $ 63.41, the resistances are aligned at $63.85 (3-week tops), $64 (round number) and $64.18 (Feb 7 high). On the downside, the supports are located at $63.01 (5-DMA), $62.41 (10-DMA) and $61.86 (20-DMA).