- WTI stretches Thursday’s recovery moves from $37.40.
- Iraq’s commitment to further output cut, risk reset favors the commodity prices.
- Confirmation of inverse head and shoulder on a four-hour chart adds strength to the upside momentum.
- Buyers stay cautious as coronavirus, inventories challenge the upside sentiment.
WTI eases from the intraday high, also the weekly top, of $39.65 to $39.33 while heading into the European session on Friday. Even so, the black gold currently prints 0.83% gains on a day as extending the previous day’s run-up.
Although no major oil-specific catalysts have been rolled out so far during the dull Asian session, risk reset seems to have paved the way for the energy benchmark’s rise. The market’s previous pessimism catches a breather amid signs of further stimulus from the US and upbeat comments by Japanese policymakers.
In doing so, the risk-tone sentiment seems to ignore the recent rise in the coronavirus (COVID-19) figures from mainland China and Beijing. Additionally, the Sino-American tension, as well as geopolitical tussle among various Asian nations, is also offering additional barriers to optimism.
Amid all these catalysts, the US 10-year Treasury yields pause the previous two-day losses, as taking rounds to 0.70%, whereas stocks in Japan and China, are also mildly positive by the press time. Also portraying the risk-on mood could be the US stock futures which are gaining below 0.20% as we write.
Other than the market mood, news that Iraq will fully comply with the global production cut agreement also benefits the oil traders. Furthermore, escalating doubts that Iran is up to preparing nuclear weapons and is denying international investigation also increases the hope of an additional increase in the oil prices. On the contrary, the OPEC+ members signalled not to extend the current production cut accord beyond August. Though, the news failed to offer any major weakness to the quote.
Considering the lack of major data/events, the oil traders may keep eyes on the geopolitical headlines, virus updates for fresh impetus. Additionally, the Baker Hughes US Rig Counts, prior 199, can offer extra information for decision making.
Technical analysis
Considering the confirmation of inverse head and shoulders formation on the four-hour chart, the energy benchmark is well placed to break $40.00 and refresh the monthly high above $40.60. In doing so, the gap below early-March low near $41.20 could be on the bulls’ radar.
Read: WTI Price Analysis: Confirms inverse head and shoulders on 4-hour chart
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