- Fresh US-Iran geopolitical jitters lift oil prices back towards monthly highs.
- Resurgent broad USD demand and US-China deal uncertainty cap the upside.
- Awaits US weekly API crude supply data for the next direction.
WTI (futures on Nymex) stalled its corrective slide ahead of the 57 handle and resumed the recent advance before facing stiff resistance once again ahead of the 58 mark, leaving the price to consolidate below the last.
WTI: 200-daily moving average (DMA) – a tough nut to crack
The oil bulls regained poise amid a fresh round of spat between the US and Iran after the Iranian officials responded to the new sanctions imposed by the Trump Administration. Iran called the US’ attempts to pressure the Islamic nation as desperate while the US offered a fresh chance for negations over the nuclear programme.
The new US sanctions come after the US drone was shot down by Iran last Thursday that escalated the Middle East tensions. The US-Iran geopolitical escalation raises supply disruption threats and renders oil positive.
However, the bullish move once again lost strength above the 58 handle, where the 200-DMA continues to guard the topside, sending the rates sharply lower towards the 57.50 levels. The latest leg lower can be also attributed to resurgent demand for the US dollar across the board, as the USD traders look to cover their short positions ahead of the speech by the US Fed Chair Powell due later today.
Any dovish comments from Powell would re-enforce the Fed rate cut expectations as early as next month while a sharp short squeeze could be seen in the greenback should Powell disappoint the doves. A stronger greenback makes the USD-denominated oil expensive for the holders in foreign currencies.
Moreover, traders remain wary ahead of the US weekly crude stocks data due to be published by the American Petroleum Institute (API) later today at 2130 GMT.
WTI Technical Levels
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