WTI testing the $59 handle in early Asia

West Texas Intermediate crude travelled to the upside overnight. On a spot basis, the black gold rallied from $58.15 to a high of $60.26. Oil was supported on OPEC+ allies production cut accord and prospects for improved demand following the trade cease-fire between China and the US. Similarly, oil futures climbed Monday, with August WTI adding $1.25, or 2.1%, to $59.71 a barrel on the New York Mercantile Exchange after touching a high of $60.28. 

Organization of the Petroleum Exporting Countries set a nine-month extension

The meeting of the Organization of the Petroleum Exporting Countries had drawn to a close with an agreement a nine-month extension. Russian President Vladimir Putin said on June 29 he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day, or 1.2% of global demand, until December 2019 or March 2020. Indeed, the combination of the ceasefire trade truce is a positive as well and the prospects of easier monetary policy keep the supply side argument in favour of the bulls also. However, there are a number of unknowns still, one of which is Iran which hinders the demand side of the oil market equation. 

WTI levels

From a technical standpoint, WTI closed back above the 200-Experiential Moving Average bringing the $60 psychological figure back into scope. Instead, the weekly lows at 56.77 are now back over the horizon which guards a run down to the 61.8% Fibo around the 52 handle and the14th Jan 50.41 lows ahead of the 26th November lows at 49.44. On the upside, however, the bulls will now look to the 63.79 swing highs on a break of the $60 figure.