WTI bulls step into early action in the open

WTI crude spot has opened the day higher and is trading up near 0.7% at the time of writing, recovering in a strong correction following Friday's -2.67% close.

WTI is making an early advance to test old hourly support after it melted at the end of the week from a high of $64.01 to a low of $61.87 as investors fretted about the prospects of new restrictions from some of the world’s largest importers.

''Asia appears to be the hot spot, with oil demand expected to slow as countries increase restrictions in a bid to stop the spread of the virus,'' analysts at ANZ Bank said.

''However, we don’t think this will cut off the path to normalisation for demand. High vaccination rates in Europe and the US have limited the level of restrictions, despite rising cases. This has seen demand remain robust, as mobility continues to improve. Overall, this should keep the market tight,'' the analysts argued. 

Nevertheless, the price posted the biggest week of losses in nine months as the services company Baker Hughes said that US production rose to 11.4 million barrels per day in the most recent week, and drilling firms added rigs for the third week in a row.

Additionally, the Organization of the Petroleum Exporting Countries and its allies are also slowly boosting supply that had been shut early in the pandemic. 

WTI technical analysis

At first glance, there are prospects of a downside continuation if the price fails to break the trendline resistance and horizontal resistance as per the 1-hour illustration above. 

However, from a daily perspective, a break of the trendline resistance will open prospects of a deeper correction to test the 38.25 and then the 50% mean-reversion targets as per the daily chart's analysis below: