- The US sanctions and OPEC+ production cuts join reduction of the Baker Hughes rig counts and the US output decline to highlight supply worries.
- Upbeat reports concerning the much-awaited trade deal between the US and China, coupled with welcome PMIs from China, pleased energy traders via demand optimism.
WTI trades near the day’s high surrounding $60.50 during early Monday. The energy benchmark recently rose as doubts over oil supplies from Venezuela and OPEC+ output reductions confronted optimism concerning the US-China trade deal and positive data from China.
While power outage and increased sanctions from the US have already weighed on Venezuela’s oil production, the Trump administration’s additional pressure on foreign firms to trade less oil with the nation tightened the global crude supplies. Adding to macro output constraint is OPEC+ production cuts that have been agreed by the Organization of the Petroleum Exporting Countries and Russia.
Further, 10 rigs’ decline in the weekly Baker Hughes US oil rig counts to 1006 and Reuters report signaling a drop in the US oil output in January to 11.9 million barrels per day became additional catalysts that together could portray supply worries.
On the demand side, positive signals for the US-China trade deal that has threatened global growth and future energy demand most of the last-year pleased oil buyers. Adding to that were welcome purchasing managers’ indices (PMI) from China that were published during Sunday and early Monday.
Next up in the focus will be developments surrounding how the world’s top two economies progress over the much-awaited trade deal ahead of Chinese delegated reach Washington on Wednesday. Meanwhile, upbeat prints of the scheduled manufacturing PMI from the UK and the US could also entertain WTI bulls.
WTI Technical Analysis
The oil benchmark needs to clear March 29 high near $60.80 in order to further rise towards $61.20 whereas 200-day simple moving average (SMA) level of $61.60 could challenge optimists then after. In a case prices rally beyond $61.60, it’s wise to aim for $62.30, an upward sloping trend-line since January 11 while being positive on the outlook.
In case prices fail to hold recent strength, $60.20, $60.00 round-figure and $59.60 seem nearby supports, a break of which can recall $59.00 and $58.10 on the chart.
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