- Escalating US-Iran geopolitical tensions accentuate oil supply concerns, boost prices.
- Hopes of OPEC+ cuts extension and US-China deal ahead of G20 Summit underpin.
- Eyes on US-Iran news, US weekly crude supply reports and trade for fresh directives.
WTI (futures on Nymex) pulls back from fresh three-week highs of 58.21 reached in early trades, now consolidating below the 58 handle, as the bulls await fresh developments surrounding the US and Iran for the next push higher.
Upside stalls just below the 200-daily moving average (DMA)
The US oil rose over 1% so far this Monday, reacting positively to the increased supply risks, emanating from mounting geopolitical tensions between the US and Iran after the US Secretary of State Pompeo announced over the weekend that the US would announce “significant sanctions” on Iran on Monday.
This comes after the US drone was shot down by Iran on Thursday that escalated the Middle East tensions and almost prompted the US to retaliate. It was reported on Friday that the US President Trump called-off an imminent military strike on Iran.
While the Iranian conflict drove WTI about 10% higher last week, the expectations that the OPEC+ will agree on extending the oil output cuts next month also keep the sentiment around the black gold buoyed. Further, broad-based US dollar weakness on dovish Fed rate expectations also collaborate to the bullish momentum in the prices. A weaker greenback makes the USD-denominated oil cheaper for the holders in foreign currencies.
Despite the upbeat momentum, the bulls take a breather after having run into the key 200-DMA placed at 58.29. A break above the last will open doors for attest of the 100-DMA at 58.76. Meanwhile, “on the downside, the 200 weekly EMA (last week’s low) and the 61.8% Fibo come into focus that guard prospects for a correction to back towards the14th Jan 50.41 low and then the 26th November lows at 49.44,” FXStreet’s Analyst, Ross J. Burland notes.
Attention now turns to the US weekly crude stocks report due later this week and on the US-China trade developments for fresh trading impulse.
WTI Technical Levels
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