WTI SIGNAL : WTI crude oil buyers keep reins around $76.50 on downbeat USD, geopolitics

  • WTI print four-day uptrend the highest levels since November 26.
  • Bulls cheer softer USD, upbeat inventories and concerns over Iran.
  • US data, risk catalysts are the key to fresh impulse.

    WTI crude oil remains firmer for the fourth consecutive day during the mid-Asian session on Thursday, up 0.40% intraday at $76.60 by the press time.

    The black gold jumped to the highest since November 26 the previous day as the US dollar weakness joined upbeat oil inventories. Also favoring the energy bulls were comments from Saudi Arabia’s King Salman bin Abdulaziz.

    The US Dollar Index (DXY) dropped the most in a week to poke the monthly low before closing around 95.88 on Tuesday, sluggish around 95.90 at the latest. In doing so, the greenback gauge tracked a jump in the US Treasury yields and downbeat US data.

    US Treasury yields rallied the most in three weeks the previous day after an auction of the US seven-year Treasury bond showed disappointing demand for the government securities during the holiday period. “The seven-year notes sold at a high yield of 1.48%, around two basis points higher than where they had traded before the auction,” said Reuters.

    That said, the US 10-year Treasury yields stay firmer around the monthly top near 1.55% by the press time while S&P 500 Futures print mild losses at the latest.

    On Wednesday, the US Pending Home Sales for November dropped below the forecast of +0.5% to -2.2% MoM whereas Good Trade Balance hit a record deficit of $-97.8B versus $-83.2B prior.

    Moving on, the weekly inventory data from the US Energy and Information Administration (EIA) flashed -3.576M figures versus -3.143M forecast.

    It’s worth noting that the ongoing global pressure over Iran for denuclearization seems to escalate the geopolitical tension surrounding the Middle Ease and help the oil prices. Amid these plays, Saudi King Salman raised concerns over Iran’s lack of cooperation with the international community on its nuclear program and ballistic missile development. “The stability and balance of the oil market is a cornerstone of Saudi energy policy, it is important that all producers comply with the OPEC+ agreement which is essential for oil market stability,” added Saudi King Salman.

    Elsewhere, fears of the South African covid variant, namely Omicron, escalate amid record high infection, which in turn should have challenged the energy buyers. However, the global policymakers’ rejection to announce heavy activity restrictions during the holiday season seems to defend the bulls.

    Looking forward, an absence of major data/events may keep oil buyers hopeful but the US second-tier figures and risk catalyst are worth observing for clear direction.

    Technical analysis

    A successful break of the two-month-old resistance line, around $77.00 by the press time, becomes necessary for the US oil buyers to approach the $80.00 threshold. In absence of this, the commodity prices may witness a pullback towards the 50-DMA level of $75.70.



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