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  • Pares gains as sentiment sours after Saudi oil output increase looks to counter Iran sanctions.
  • Eyes on US core PCE price index and drilling activity report for further momentum.

The recovery in WTI (oil futures on NYMEX) ran out of steam below the 72.50 barrier after Saudi Arabia’s announcement of ramping up output dented the investors’ sentiment.

Earlier today, Saudi’s oil giant, ARAMCO, announced a 600k oil output boost to balance a potential global supplies shortfall after the US imposes sanctions on Iran, the OPEC’s no. 3 oil exporter.

Moreover, the bulls appear reluctant to extend the upside towards the multi-week tops near $ 72.80, in the wake of a broadly stronger US dollar and rising US output. The US crude production hit a record high of 11.1 million bpd last week, the Energy Information Administration (EIA) data showed last Wednesday.

The immediate focus now remains on the US core PCE price index for fresh dollar trades until the release of the US Bakers Hughes rigs counts data at 1700 GMT.

WTI Technical Levels

Resistances: $ 72.83 (mid-May tops), $ 73 (round number), $ 73.50 (psychological level).

Supports: $ 71.92 (5-DMA), $ 70.73 (Sept 20 low), $ 70.52 (10-DMA).