|

WTI extends gains to $45.00 mark, highest levels since 6 March

  • WTI surged nearly $2 to reach $45 for the first time since early March on Tuesday.
  • A confluence of risk on factors, including decreased US political uncertainty and vaccine, strong data and OPEC+ optimism are all helping.

WTI trades with gains of nearly $2 or 4.5% on Tuesday, taking the American benchmark for sweet light crude oil to briefly above the $45.00 mark, its highest levels since 6 March, prior to when Saudi Arabia initiated the price war that eventually resulted in the collapse of the front-month WTI futures to record lows of lower than -$30 per barrel.

Confluence of positives lifts crude to eight-month highs

Crude oil prices surged on Tuesday, seemingly buoyed by a significant uptick in the market’s broader appetite for risk on a few bullish macro factors;

The Trump Administration allowed the General Services Administration to inform the incoming Biden Administration that the formal transition process can begin. Though Trump is yet to admit defeat and is still pursuing his countless lawsuits and claiming fraud, this seems to be the first step to him admitting defeat, which gives markets one thing less to worry about.

Moreover, stock and commodity alike all seem to also still be deriving support amid the afterglow of Monday’s positive vaccine update from AstraZeneca, as well as stronger than expected US data and the news that the US Treasury Department is set to be in “safe hands” with former Fed Chairman Janet Yellen in charge.

More specifically for the crude oil complex; the notion that despite recent positive news on the vaccine front, OPEC+ members have yet to demonstrate a lower appetite for production cuts is also supportive.

Indeed, the greatest threat to the crude oil markets much hoped for at least three-month output cut extension from the cartel is likely to be recent crude oil price upside itself; countries might want to capitalise on higher prices by upping output at an earlier date (though this is just speculation).

Meanwhile, although not garnering a significant amount of attention on Tuesday, news of further risk to Saudi supply has also likely helped buoy crude oil prices today; Yemen’s Houthi rebel group attacked a Saudi Aramco distribution station in the Saudi Arabian city of Jeddah and a fire reportedly broke out. However, Aramco's said its supply of fuel to customers was not affected.

WTI bulls to eye a retest of big support at 26 August high

WTI crude oil prices cleared the 26 August high at $43.78 earlier on during Tuesday’s European session, opening the door to a sustained move to the upside, given a lack of any significant areas of resistance ahead of $49.00.

However, some profit-taking in wake of Tuesday’s outsized gains is likely warranted and could push WTI back towards a retest of the 26 August high. Here bulls are likely to be eager to buy the dip, so it ought to provide formidable resistance, but if the level does go, the 11 November high at $43.00 will be in focus.

WTI daily chart

wti daily

Author

Joel Frank

Joel Frank

Independent Analyst

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset

More from Joel Frank
Share:

Editor's Picks

EUR/USD advances above 1.1800 ahead of German inflation data

EUR/USD stretches higher above 1.1800 in the European session on Friday, helped by sustained US Dollar weakness. Attention now turns toward the release of the preliminary inflation data for February from Germany and its major states during the day.

GBP/USD struggles near 1.3500 amid UK political drama, BoE easing bias

GBP/USD struggles to build on the overnight modest bounce from the weekly low and oscillates in a narrow band near 1.3500 in European trading on Friday. The Gorton and Denton by-election, held on February 26, has become a focal point of political drama in the UK, along with the Bank of England (BoE) easing expectations, acts as a headwind for the British Pound and the GBP/USD pair.

Gold flat lines below $5,200; traders look to US PPI for fresh impetus

Gold struggles to capitalize on its modest gains registered over the past two days and trades below the $5,200 mark through the first half of the European session on Friday. Geopolitical risks remain in play amid a large US naval and air power buildup in the Middle East.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary. 

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.