- WTI takes a U-turn after refreshing two-week top.
- Saudi Arabia hints extension of supply cuts to May-June, US-Iran tussles intensify.
- Vaccine, stimulus optimism battle US-China tussles amid a quiet session.
- API inventories, risk catalysts eyed as Ever Given left Suez Canal the previous day.
After refreshing multi-day high during the early Asian session, WTI eases to $61.87 while trimming intraday gains to 0.44% amid the initial trading on Tuesday. In doing so, the oil benchmark fails to benefit from the US dollar’s pullback while also struggling to justify the energy-linked news published before a few hours.
The US dollar index (DXY) steps back from the yearly top, flashed the previous day, to 92.89, by the press time. In doing so, the greenback should have respected S&P 500 Futures, up 0.10% on a day, as well as a step back of the US 10-year Treasury yield to 1.71%, down 1.1 basis points.
The risk-on mood could have taken clues from unblocking of the Suez Canal and the coronavirus (COVID-19) vaccine news. Also favoring the sentiment could be US President Joe Biden’s $1.3 trillion infrastructure plan. Furthermore, the UK, France and Germany’s readiness to cooperate while battling the covid virus add to the market’s optimism.
Alternatively, the Sino-American tussles and the US push for Iran’s denuclearization are the key negatives for the risk. However, the Washington-Tehran story can help oil prices amid supply concerns.
It should be noted that Saudi Arabia’s signals, conveyed by Reuters, to keep the global oil supply cuts on board, as well as voluntary output reduction, favor the WTI buyers ahead of this week’s OPEC+ meeting, scheduled for Thursday.
Ahead of that, today’s API Weekly Crude Oil Stocks for the period ended on March 26, prior to 2.927M, will be the key. However, major attention will be given to the US dollar moves and risk news amid a light calendar.
Technical analysis
Although recovery moves eye 21-day SMA level of $62.55, the quote’s further upside will have to cross one-month-old horizontal resistance around $63.75 to recall the WTI buyers. Meanwhile, the $60.00 threshold can offer immediate support whereas the monthly low near $57.30 will be the key for oil bears’ entry.
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