- Prices of the barrel of WTI moved above $49.00 in early trade.
- Hopes of a US-China trade deal bolster the upside in crude oil.
- US oil rig count dropped by 8 last week.
Crude oil prices keep the upbeat tone at the beginning of the week, pushing the barrel of WTI to fresh multi-day tops beyond the $49.00 mark, although losing some momentum afterwards.
WTI looks to US-China trade talks
Prices of the barrel of the American reference for the sweet light crude oil are extending the rally on Monday bolstered by rising hopes that China and the US can clinch a deal at the 2-day meeting kicking in today in Beijing.
Traders see a potential agreement as a way to avoid a global slowdown, a scenario that has been gathering traction among investors in past weeks.
Supporting higher prices, Saudi Arabia announced it slashed its oil output during last month along with other producer and ahead of the start of the output cut deal this month.
Also collaborating with the upside, Libya’s Sharara oil field, the largest producing field in the country, is struggling to resume its operations after the theft of key operational equipment.
Weekly data from Baker Hughes’ latest report saw US oil rig count diminishing by 8 during last week, taking the total oil rigs to 877.
Additionally, crude oil speculative net longs rose to 2-week highs during the week ended on December 18, as showed by the latest CFTC report.
What to look for around crude oil
Rising US oil production should remain a threat to any serious attempt of recovery in prices. This scenario contrasts with the bullish one in the Middle East, where OPEC+ producers agreed in November to start curbing production from this month. In addition, any agreement on the US-China trade front could reduce fears of a global slowdown, morphing into additional support to oil prices.
WTI significant levels
At the moment the barrel of WTI is up 0.95% at $48.65 and a breakout of $49.34 (high Jan.7) would aim for $52.16 (200-week SMA) and finally $54.45 (high Dec.4). On the downside, the next support lines up at $48.03 (21-day SMA) seconded by $45.82 (10-day SMA) and then 42.22 (2018 low Dec.24).
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