- Middle-East tensions powered WTI above $60, fresh yearly tops.
- WTI is off the highs, still 2% higher in the European session.
- Vaccine, US stimulus optimism keep economic recovery hopes alive.
WTI (futures on NYMEX) has eased from the highest levels since January 2020 reached at $60.95, now trading around the mid-60s, still adding 1.80% on a daily basis.
Last week’s 5% rally in the black gold picked up pace this Monday, as the price stormed through the critical $60 level, on fears of heightened tensions in the Middle East.
The Saudi-led coalition fighting in Yemen reportedly intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, escalating the Middle East geopolitical tensions.
Further, rapid covid vaccines rollout globally combined with likely easing of the virus-induced restrictions in major economies boosted hopes of swifter economic upturn, which in turn revived expectations of oil demand recovery and lifted the WTI barrel.
The sentiment around the black gold remains underpinned by a sharp drop in the US stockpiles, as reported by the American Petroleum Institute (API) late Tuesday.
The API data showed that the US crude inventories fell by 3.5 million barrels in the week to Feb. 5 to about 474.1 million barrels.
From a wider perspective, the US oil remains underpinned by the extension of the OPEC and its allies (OPEC+) oil output cuts and Saudi Arabia’s voluntary production cuts this and the next month.
Markets look forward to the US weekly crude stockpiles data for fresh trading impetus. In the meantime, the Mid-East developments and stimulus updates will be closely followed.
WTI technical levels
“The previous year’s high of $65.45 is well in the spotlight while the September 2019 peak surrounding $63.15 and December 2019 high of $62.25 also gain the market’s attention. It should, however, be noted that a downside break of $59.54 will need to break below the 10-day SMA level of $57.60 to recall the short-term WTI sellers,” FXStreet’s Analyst Anil Panchal notes.
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