WTI retreats from one-week tops, holds above mid-$65.00s

WTI shot to fresh one-week tops during the early North American session, albeit quickly retreated thereafter and was last seen trading just above mid-$65.00s.

The black gold has now moved back into the positive territory for the third straight day and looking to build on its strong momentum from three-week lows, around mid-$61.00s touched last Friday. Bulls seemed rather unaffected by the possibility of additional supply from Iran, which holds the world’s fourth-biggest oil reserves.

The fifth round of negotiations between the United States and Iran resumed in Vienna this Tuesday. The price action, however, seems to suggest that the market is not expecting the nuclear agreement to bre reinstated in the near future. This, in turn, suggests that Iranian oil exports are unlikely to return quickly to the global market.

Meanwhile, the prevalent bearish sentiment surrounding the US dollar acted as a tailwind for dollar-denominated commodities, including oil. This turned out to be the key factor behind a modest uptick in oil prices during the second half of the trading action. That said, worries that ever-increasing COVID-19 cases in some Asian countries could hinder fragile fuel demand recovery might hold bulls from placing aggressive bets.

This makes it prudent to wait for some strong follow-through buying beyond the monthly swing highs, around the $67.00/barrel mark before positioning for any further appreciating move.

Technical levels to watch