- Bears continue to guard the 70 fence, as US dollar looks to extend the bounce.
- But downside remains cushioned amid bullish EIA report and supply risks.
WTI (oil futures on NYMEX) reversed the latest upmove, as markets seek to lock-in gains after having failed just shy of the psychological $ 70 level. Also, a sharp rebound seen in the US dollar across its main competitors capped the rally in oil.
The prices briefly broke its bullish consolidative range to the upside, as concerns over serious supply disruptions from Venezuela and Iran underpinned the sentiment.
There are increased expectations that the US sanctions over Iran would threaten the Iranian exports and lead to the tightening of global supplies. Meanwhile, the recent reports showed that the crude exports from crisis-struck OPEC member Venezuela have almost halved to around 1 million bpd in recent years.
Moreover, the black gold also cheered a bigger-than-expected drop in the US crude stockpiles, as reflected by the EIA fuel stocks report released yesterday. The US commercial crude inventories fell by 2.6 million barrels in the week to Aug. 24, to 405.79 million barrels.
Attention now turns towards the US core PCE price index data due later today for any impact on the USD-sensitive oil.
WTI Technical Levels
Higher-side levels: $ 70 (psychological levels), $ 70.43 (July 30 high) and $ 71.10 (July 20 high).
The Swissquote Bank Research Team notes: “Short positions below 69.00 with targets at 68.10 & 67.80 in extension.”
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