WTI bid in a correction into the end of the week, recovering from slide

WTI is currently trading at 55.77, between a range of 55.69 and 55.88, consolidating the overnight volatility.
Oil was sold off into the New York session but recovered some ground late in the day.

Ross J Burland FXStreet

Oil was sold off into the New York session but recovered some ground late in the day following escalations of the U.S. and Iran stand-off. In New York, spot prices has travelled between $57.29bbls and $54.76bbls, ending the day down -1.82%, although up off its lows to $55.50bbls. August WTI lost $1.48, or 2.6%, to settle at $55.30 a barrel on the New York Mercantile Exchange after falling 1.5% on Wednesday. In Asia, the price is consolidating but better bid considering the heightened tensions between the US and Iran.

Just as de-escalation with Iran looked to be on the cards after Pompeo's remarks suggested Iran was ready to negotiate, accompanied by what appeared to be a technical sell-off that triggered stops which could be attributed to the fall, a late announcement that the US had shot down an Iranian drone took the spotlight and helped the price to recover. Trump said that the amphibious assault ship, the USS Boxer, shot down an Iranian drone in the Strait of Hormuz in a defensive action, although Iran's FM Zarif claimed not be aware of any drone downing following Trump's announcement, according to Reuters. “We have no information about losing a drone today,” Zarif told reporters at the United Nations.

"In US markets, tropical storm Barry came and went without any major outages, with production and refining already ramping back up. While the most recent EIA data showed large product builds, this was likely due to higher runs heading into the storm," analysts at TD Securities explained.

WTI levels

Following a break below the fresh weekly lows, WTI has extended the fall to a fresh low of 54.76 today. Bears now sit below the 4HR 200 moving average and have eyes on the 200-week moving average down at 52.98. Thereafter, we have the 14th Jan 50.41 lows ahead of the 26th November lows which are located at 49.44. On the upside, 57.40 comes in as a key area with the confluence of prior support and an accumulation of daily 20, 50 and 200 moving averages.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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