WTI prices firm on the $54 handle, bulls look to a test towards $56.80 again

Oil prices have been on the back foot since July but have recently found some traction and bulls are stepping in to protect the 5 handle. Spot oil, overnight, ranged between $53.79bbls and $55.30bbls, down -0.47% on the day while oil futures ended lower for a second consecutive session. West Texas Intermediate crude for September delivery dropped 76 cents, or 1.4%, to settle at $54.47 a barrel on the New York Mercantile Exchange, after trading as low as $53.77. In Asia, prices are firmer by 0.26% so far. 

Geopolitics driving price

On the geopolitical front specifically related to oil prices, analysts at TD Securities explained that the US Justice Department is looking to seize the Iranian tanker that had previously been held by the UK remain in the shadows of risk sentiment, which remains the primary driver for energy prices:

 "While the previous round of weakness prompted trend followers to strap on more shorts, the algos could well cover their shorts in the near-term as downside momentum fails to gather steam. Indeed, the bar is fairly low for CTAs to cover some recently added shorts in WTI, with the key trigger level standing just above $56.30/bbl, with our estimated key trigger for Brent further north at $63.40/bbl."

WTI levels

Technically, the cluster of the 50 and 200 daily moving averages that have a confluence with the 38.2% Fibo' keeps a lid on recoveries. The prices are back to test below the 23.6% threshold and bears can target a break towards the 52 handle.  On the upside, if the bulls manage a break of said confluence resistance, then there is space for a recovery to the 58 handle to meet trend line resistance.