WTI: Supply cut support pleases buyers targeting $60+

WTI is taking bids near $58.50 during early Asian sessions on Monday. The energy benchmark recently benefited from the US inventory reports and comments from global oil producers’ favoring further supply cuts. However, uncertainties surrounding the US-China trade deal and doubts over the global economic growth continue to challenge bulls.

The EIA crude oil stocks change dropped -3.862 million during the week ended on March 08 versus previous week’s +7.069 million addition. With the depleting inventory figures, energy traders took benefit of the USD’s weakness to increase buying bets on the WTI. Also adding to the energy strength were upbeat comments from the global oil producers like Saudi Arabia and Russia. Both the leaders of the OPEC+ alliance kept on favoring further production cuts in order to balance the global energy market.

On Friday, the International Energy Agency (EIA) came out with its February month output report that mentioned OPEC’s production declining to a four-year low.

Recently, Reuters reported that Saudi Arabia said that the organization of the petroleum exporting countries (OPEC) may need to extend oil cuts until the year 2019 end at the sidelines of an OPEC and non-OPEC monitoring committee meeting. Adding to the supply-cut speculations were comments from the Russian energy minister that said the nation could continue supporting the alliance’s production-cut goal.

Though, doubts over a trade deal between the world’s two largest economies and looming concerns of a global economic growth continue to challenge energy bulls. Latest comments from the US lawmakers and a delay Trump-Xi meet from March raises expectations that the US and China are still far from solving their trade differences that have been challenging global economic sentiment off-late.

WTI Technical Analysis

FXStreet Analysis, Ross J Burland, expects prices to extend bullish trajectory above $59.70 double top whereas $57.93 acts as immediate support to watch.

On the approach to the 50% Fibo located in the 59.70s, the price holds above the double-top highs and above the 57.93 horizontal prior resistance line going back to mid-Nov 2018. However, a break of 59.70 is needed where bulls will then look beyond to the 61.8% Fibo of the Oct 2018 sell-off to late Dec lows at 63.74, reviving prospects for the 70 handle. On the downside, a fall to 54.50 will open a case for 50.50 as the 23.6% Fibo support structure.