• WTI grinds higher around seven-year peak during four-day uptrend.
  • US President Biden calls UN Security Council meeting to discuss risk of the Russian invasion to Ukraine.
  • US dollar rallied after Fed emphasized inflation concerns to hint at rate hikes.
  • US PCE Inflation figures are important, risk catalysts are the key.

WTI crude oil bulls take a breather around $86.90 during Friday’s Asian session, after refreshing the seven-year high the previous day. In doing so, the oil benchmark awaits clear direction amid a mixed play of catalysts and an absence of major data/events.

The black gold rallied to the highest levels since late 2014 the previous day before easing from $88.00. The pullback moves, however, were recently reversed from $85.73.

That said, looming fears of Russia’s invasion of Ukraine contrasts with the US Federal Reserve’s (Fed) hawkish message to entertain the oil traders. However, given the higher emphasis on the immediate geopolitical fears and receding negative concerns over the coronavirus seem to have underpinned the commodity’s latest advances.

“Russia, the world's second-largest oil producer, and the West have been at loggerheads over Ukraine, fanning fears that energy supplies to Europe could be disrupted, although concerns are focused on gas supplies rather than crude,” said Reuters. On the same line were US President Joe Biden’s comments during the CNN interview, citing the escalating risks of Russia's invasion of Ukraine and looking to additional macroeconomic assistance for Kyiv.

Also helping the WTI crude oil could be likely preparations for the next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+. Ahead of the meeting, Reuters learns from several sources that OPEC+ is likely to stick with a planned rise in its oil output target for March.

Elsewhere, the US Dollar Index (DXY) rallied to the highest levels last seen during July 2020 as the Federal Reserve (Fed) indirectly confirmed the March rate hike and cited room for more lift-offs.

Talking about the data, Advance Q4 US GDP rose 6.9% annualized versus 5.5% market consensus and 2.3% prior. On the same line was the US Initial Jobless Claims for the week ended in January 21that came in 206K compared to 260K expected and 290K previous. It should be noted, however, that the US Durable Goods Orders for December dropped by -0.9% for December, below -0.5% market consensus.

Against this backdrop, equities reversed initial gains and closed with losses while the US 10-year Treasury yields ended Thursday’s North American trading session with four basis points (bps) of a downside to 1.80%.

Moving on, to the US Core PCE Price Index figures for December, expected 4.8% YoY versus 4.7% prior, will be important for oil traders to watch. However, major attention will be given to the geopolitical concerns as Russia is the world’s second-largest crude producer.

Read: US PCE Inflation Preview: Dollar rally has more legs to run

Technical analysis

A clear upside break of the two-month-old ascending trend line, near $88.20 by the press time, becomes necessary for the WTI bulls to keep reins. In absence of this, a pullback towards a six-week-long support line around $84.30 can’t be ruled out considering the overbought RSI conditions.

Additional important levels

Overview
Today last price 86.91
Today Daily Change 0.61
Today Daily Change % 0.71%
Today daily open 86.3
 
Trends
Daily SMA20 81.14
Daily SMA50 75.76
Daily SMA100 76.84
Daily SMA200 72.72
 
Levels
Previous Daily High 87.48
Previous Daily Low 84.64
Previous Weekly High 86.93
Previous Weekly Low 82.64
Previous Monthly High 77.26
Previous Monthly Low 62.34
Daily Fibonacci 38.2% 86.39
Daily Fibonacci 61.8% 85.72
Daily Pivot Point S1 84.8
Daily Pivot Point S2 83.3
Daily Pivot Point S3 81.96
Daily Pivot Point R1 87.64
Daily Pivot Point R2 88.98
Daily Pivot Point R3 90.49

 

 

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