Oil futures on NYMEX is seen extending its retreat from multi-month highs on Wednesday, as investors brace for the release of the US crude stockpiles report due to be published by the API later today, which may show another build in the crude inventories.
The renewed weakness in oil can be also attributed to a picking-up in demand for the US dollar across the board, as markets favor the US currency ahead of the FOMC minutes.
The black gold rallied hard and reached fresh seven-week highs at $ 54.99 on Tuesday, mainly driven by optimistic comments from the OPEC Chief Barkindo, citing that the OPEC producers are aiming to achieve higher compliance level than Jan’s 90%.
His comments implied further production cuts are in-stored in the year ahead, which are likely to rebalance oil markets.
WTI technical levels
A break above $ 54.99 (7-week highs) could yield a test of $ 55.24 (Jan 3 high). While a breach of support at $ 54 (zero figure) would expose the 50-DMA support of $ 53.11.
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