WTI eases on weakening Chinese oil demand, profit-taking

Bulls gather pace for further upside.
Weaker DXY and firm 2018 oil outlook support.
US drilling report and inflation data in focus.

Dhwani Mehta FXStreet

WTI (oil futures on NYMEX) moved away from multi-year tops, but remains on track to book four straight weekly gains, as the bulls await the US CPI and drilling activity report for the next push higher.

WTI: Will it regain $ 64?

The barrel of WTI stalled its recent upmove and fell sharply towards the $ 63 threshold, before recovering some ground to now consolidate near mid-63s. The bulls take a breather, as markets begin to believe that the rally could be overdone.

Moreover, weakening Chinese oil demand, as reflected by China’s crude oil imports data, also added to the retreat in the prices from the highest levels seen since Dec 2014. China’s crude oil imports in December eased to 33.7 million tonnes, or 7.97 million barrels per day, versus 37.04 million tonnes in November, customs data showed on Friday.

However, the sentiment remains underpinned amid expectations of a tighter market this year while ongoing rout in the US dollar versus its main peers also keeps the positive tone intact around the USD-sensitive oil.

Later today, the US rigs count and inflation data will be closely watched for moves in the black gold. At the time of writing, WTI drops -0.56% to $63.44 while Brent trades modestly flat at $69.17.

WTI Technical Levels

The resistances are aligned at $64 (round number) ahead of $ 64.75 (3-year highs) and $65 (psychological levels). On the downside, supports are located at $63.19/12 (daily low/ 5-DMA), $62.50 (psychological levels) and $62.27 (10-DMA).

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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