- WTI short covering underway and oil has spiked into a key bullish zone, making a high of $57.57bbls on Wednesday as with the market expecting tighter global crude supplies and hopes of a trade deal announcement or at least positive progress from the US and China.
Prices are now extending their streak of gains to a sixth consecutive session, kept afloat by ‘deteriorating production from exempt countries and the reality that Saudi Arabia has shouldered the responsibility for pursuing a balanced market,” analysts at TD Securities explained.
“The country is firmly targeting higher prices,” the analysts added.
However, the U.S. Energy Information Administration said in a monthly report Tuesday that it expects oil production from seven major U.S. shale plays to climb by 84,000 barrels a day in March to 8.398 million barrels a day.
This will make today’s data from the API key and tomorrow’s EIA that will release its separate, weekly petroleum status, a day later than usual due to the Presidents Day holiday earlier in the week. Tomorrow’s EIA data is expected to show an increase of 3.5 million barrels in crude stockpiles for the week ended Feb. 15 and to forecast supply declines of 1.1 million barrels for gasoline and 1.4 million barrels for distillates.
FOMC in focus
While supply and demand is a fundamental driving contributor to the price action today, the dollar is also on the backfoot and helping buoy the commodities sector. The FOMC minutes will be key today and could be a catalyst that might just cap the rally if the minutes are not as dovish as the market might hope for. Key attention will be paid to QT or any mention of it in the minutes. Anything less than dovish, in line with Mester and Williams, (neutral), the dollar could firm and cap the price of oil today.
WTI levels
US crude has been closing above the 38.2% retracement of the October to December sell-off at 55.55 and looks to close above the 100-day MA at 56.69. The price is also now above the Ichimoku cloud with the price well below the trending lagging span that indicates that the bull trend is well entrenched. Eyes are on 60.00 if the price can hold above 56.50 on a daily closing basis which could encourage adding to longs mentality from traders. On the flip side, a break back below the 38.2% fibo would target 55.80 (S1) and the day’s lows.
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