- Oil is basing in the $60 handle, as the fundamentals combined paint a bullish backdrop
- 63.79 is the next key target, with eyes on Iran, OPEC and trade wars.
Oil prices were relatively steady on Friday, with spot travelling between $59.85 and $60.66, ending the session at $60.29. August West Texas Intermediate crude settled at $60.21 a barrel on the New York Mercantile Exchange, closing the week 4.7% higher, but below Wednesday's highest settlement for front-month prices since May 22 at $60.43. Oil prices are in WTI are moving in a tight 20 cent range at the start of Asia while the focus is on OPEC, the Chinese economy, trade and tensions in the Middle East.
The black gold is basing in the $60 handle, as the fundamentals combined paint a bullish backdrop, with prices buoyed by positive Sino-U.S. trade talks as well as the OPEC+ deal kicking in. As for OPEC, the IEA published its monthly oil report on Friday highlighting the same concern as OPEC’s monthly oil report where rising non-OPEC production offset OPEC’s effort to balance the market. "The agency sees that the current rate of OPEC cut will not be sufficient to clear the supply overhang in 2020, and they see the oversupplied market backdrop as likely to return next year. Investors continued to give more weightage to a deteriorating demand outlook. This concern was reflected in their long positions; fell by 3863 contracts to 244,143 contracts," analysts at TD Securities explained.
Meanwhile, the geopolitical news for last week stayed on Iran. Britain was raising the shipping threat level to its highest following continued threats of retaliation for the seized Iranian tanker. However, Britain will work for the release of the supertanker if Iran guarantees the ship will not travel to Syria, in breach of European Union sanctions. That could help ease soaring tensions between Iran and the West and deflate oil prices a touch.
WTI levels
However, technically, WTI closed out the week above 60 which is bullish, especially given the ground the price has made since bursting through the resistance trendline connecting from 23rd April/July 1st tops. 63.79 is the next key target. To the downside, the 20, 50 and 200 Experiential Moving Averages confluence around 57.80 guards the weekly lows at 56.77, then the 52 handle and then the 14th Jan 50.41 lows. Further lower, the 26th November lows are located at 49.44 as a target.
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