WTI recedes from tops, back below $54.00 ahead of EIA

WTI trims gains above the $54.00 mark.
OPEC+ rumours, US supplies drop, Saudi Arabia supported prices.
EIA’s weekly report out later in the NA session.

Pablo Piovano FXStreet

Prices of the WTI are fading the earlier advance to the $54.40 region despite renewed geopolitical concerns and OPEC+ rumours.

WTI now looks to data, China

The West Texas Intermediate seems to have met decent contention in the area of 2020 lows near the $52.00 mark per barrel (Monday), although the weekly recovery lost momentum beyond the $54.00 mark per barrel earlier on Wednesday.

In fact, crude oil prices have now turned negative for the day despite latest news cited a Houthi attack on Saudi Aramco.

Collaborating with the recovery, rumours that the OPEC+ could extend the ongoing output cut agreement or even implement deeper cuts remain on the rise and have been sustaining the apparent change of heart among traders in past sessions.

That, in combination with Tuesday’s reported drop in US supplies by around 4.3 million barrels according to the API along with easing fears of the impact on the global economy of the Wuhan coronavirus have also lent fresh oxygen to oil prices.

What to look for around WTI

The outbreak of the Wuhan virus and its potential impact on Chinese/global growth have been heavily weighing on traders’ sentiment during the past couple of weeks, adding to the already rising concerns on the excess of crude oil supply in the markets. Supporting the later, and undermining any serious rebound, the IEA expects prices to remain capped during the first half of the year following a forecasted surplus of nearly a million bpd. On the supportive side for prices emerge the persistent supply disruptions in Libya, social unrest in Iraq and a fragile US-Iran scenario, all in combination with the OPEC+ rumours, declining US oil inventories and fresh effervescence surrounding Saudi Arabia.

WTI significant levels

At the moment the barrel of WTI is retreating 0.54% at $53.66 and a breach of $52.13 (2020 low Jan.27) would aim for $51.06 (monthly low Oct.3 2019) and finally $50.47 (monthly low Aug.7 2019). On the flip side, the next up barrier is located at $54.35 (weekly high Jan.29) seconded by $57.30 (200-day SMA) and then $58.55 (55-day SMA).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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