WTI crude oil, for second consecutive day, failed to sustain move above $53.00 mark and has now reversed majority of previous session gains.
Currently trading around $52.60, the black gold initially jumped back beyond $53.00 mark in wake of Thursday’s news report that said Saudi Arabia, OPEC’s de facto leader, has slashed its production under 10 mbpd, which strengthened views of receding global oil supply glut.
Also supporting the bid tone surrounding the commodity was Chinese trade data released on Friday that showed a 14% jump in crude imports during 2016. Adding to this, bearish tone around the US Dollar was also seen boosting demand for dollar-denominated commodities – like oil, and collaborated to early strengthening move.
The commodity, however, turned sharply lower and touched a session low level of $52.30 amid skepticism over commitment to continue with the production cuts promised by major oil producers. Hence, focus would remain on the OPEC's first monthly report on January production, expected to be released in mid-February.
Meanwhile, possibilities of some long-unwinding, on repeated failure to sustain its move above $53.00 mark, could have also contributed to commodity’s slide ahead of the weekend.
Technical levels to watch
A follow through selling pressure below session lows support near $52.30 is likely to accelerate the slide below $52.00 round figure mark, towards $51.50 support (Dec. 19 low). On the flip side, $53.00-10 area now seems to have emerged as immediate resistance above which a fresh bout of short-covering could lift the commodity back towards $53.50-60 horizontal resistance ahead of $54.00 round figure mark.
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