WTI looks for clear direction near one-week low around $52.00
- WTI clings to mild gains above $52.00 after bouncing off lowest in six days.
- US dollar weakness, virus woes battle off in America and rising rig counts.
- US-Iran tension, Gaza-Israel conflict fail to entertain oil traders.
- US dollar moves, risk catalysts will be the key amid delayed inventory data.
WTI fades recent corrective pullback from $51.80 while easing to $52.16 amid the initial Asian session on Tuesday. Even so, the oil benchmark manages to avoid losses despite declining to one week low the previous day.
While the pullback of the US dollar index (DXY) from a fresh one-month high joins the coronavirus (COVID-19) woes to challenge the oil bulls, vaccine and stimulus hopes add to the geopolitical headlines concerning Iran and Israel to test the WTI sellers amid off in the US and a light calendar. It should also be noted that China’s upbeat GDP and Industrial Production data helps the black gold traders to remain optimistic.
Recently escalating optimism over US President-elect Joe Biden’s official entry to the White House, together with heavy stimulus and vaccine rollout news, favor commodities and weigh on the US dollar’s safe-haven demand. Also backing the moves are chatters that ex-Fed Chair, to be US Treasury Secretary, Janet Yellen, is also likely to support Biden’s heavy relief package despite fears of widening deficit.
Elsewhere, Iran captured a US businessman and is less in the mood to renew ties with America while Israel launched airstrikes on Gaza Strip on Monday. There are also some unconfirmed reports of the US airstrikes in Iraq.
It’s worth mentioning that US oil rig counts, as conveyed by Baker Hughes, rose 13 to 373 in the week to January 15, its highest since May, during the last week and added to the downside pressure.
Looking forward, a light calendar in Asia keeps oil traders looking for fresh clues ahead of the key speeches from Yellen and Biden, not to forget the ECB. The covid updates and any additional stimulus hint, be it from Japan and or the UK most likely, could add to the upside momentum of the commodity.
Technical analysis
Monday’s Doji candlestick on the daily (1D) chart favors WTI bulls targeting a fresh multi-month high of $54.00. However, $52.60/70 offers a tough short-term resistance to clear before confirming further upside.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
