- The barrel of WTI finally breaks above the $60.00 level.
- Risk-on sentiment continues to lend legs to the rally.
- The API, EIA reports are next on tap later in the week.
Crude oil prices extend the march north and finally surpass the critical hurdle at the $60.00 mark on Monday.
WTI sustained by risk-on mood
Prices of the West Texas Intermediate advance for the second consecutive session on Monday, returning to the area above the $60.00 mark per barrel for the first time since January 2020.
The favourable atmosphere in the risk-associated assets support further the rally in crude oil along with rising speculations that a “super-cycle” in commodities could be in the offing.
Further out, the speculative community noted net longs in the commodity climbed to 4-week highs during the week ended on February 9th according to the CFTC report. The unabated uptrend in open interest hints at the idea that there could be room for further upside in the short-term horizon. Against this, the extreme overbought condition (as per the daily RSI) carries the potential to spark a move lower sooner rather than later.
News from the OPEC cites the cartel now expects oil demand to increase by 5.8 mbpd in 2021, a tad lower than the previous forecasts, in response to the re-implementation of lockdown measures in several developed economies so far this year.
Later in the week, the usual reports on US crude oil supplies by the API and the EIA are due on Tuesday and Wednesday, respectively.
What to look for around WTI
Prices of the American reference for the sweet light crude oil (finally) trade in multi-month peaks above the $60.00 mark per barrel. Increasing inflows into commodity-based ETFs continue to support the rally in crude oil along with rising speculative net longs. The persistent drop on US crude oil supplies is another driver lifting prices in past weeks, all against the backdrop of a favourable context for riskier assets and dollar weakness. In addition, the firm growth prospects in China add to the acceleration of the vaccine rollout in Europe/rest of Asia and morph into rising expectations of a strong rebound post-coronavirus pandemic.
Eminent issues on the back boiler: Higher crude oil prices favour US shale growth. Demand-supply balance could prompt a correction lower later in the year.
WTI significant levels
At the moment the barrel of WTI is gaining 0.91% at $60.15 and faces the next resistance at 60.92 (2021 high Feb.15) seconded by $65.62 (2020 high Jan.8) and finally $66.58 (2019 high Apr.23). On the flip side, a breach of $57.43 (low Feb.12) would aim for $51.66 (monthly low Feb.1) and then $50.84 (55-day SMA).
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