WTI weaker, drops below the $60.00 mark

Prices of the WTI slip back below the $60.00 mark.
Extremely cold weather hurt the oil industry in Texas.
The API, EIA reports come in on Wednesday and Thursday.

Pablo Piovano FXStreet

Prices of the WTI grind lower to the sub-$60.00 region on Tuesday following recent YTD peaks.

WTI corrects lower from multi-month tops

After surpassing the critical $60.00 mark per barrel for the first time since January 2020 at the beginning of the week, prices of the West Texas Intermediate now give away part of those gains and recede to the sub-$60.00 region on Tuesday.

The knee-jerk in crude oil prices comes despite the unexpected cold weather in the US - particularly Texas - forced refineries to halt their normal activity in past hours.

Away from the US, geopolitical tensions continue to escalate after the recent drone attack to Saudi Arabia, while Norwegian oil workers and their union came to an agreement, therefore avoiding probable strikes.

Later in the week, the API and the EIA will publish their report on US crude oil supplies on Wednesday and Thursday, respectively, followed by Baker Hughes’ report on the US drilling activity on Friday.

What to look for around WTI

Prices of the American reference for the sweet light crude oil (finally) trade in multi-month peaks above the $60.00 mark per barrel on Monday. Increasing inflows into commodity-based ETFs have been supporting the rally in crude oil along with the persistent drop of US crude oil supplies, all amidst the favourable context for riskier assets coupled with dollar weakness. In addition, the firm growth prospects in China add to the acceleration of the vaccine rollout in Europe/rest of Asia and morph into rising expectations of a strong rebound post-coronavirus pandemic.

Eminent issues on the back boiler: Higher crude oil prices favour US shale growth. Demand-supply balance could prompt a correction lower later in the year.

WTI significant levels

At the moment the barrel of WTI is losing 1.35% at $59.36 and a breach of $57.43 (low Feb.12) would aim for $51.66 (monthly low Feb.1) and then $501.09 (55-day SMA). On the upside, the next resistance is located at 60.92 (2021 high Feb.15) seconded by $65.62 (2020 high Jan.8) and finally $66.58 (2019 high Apr.23).

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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