WTI on the bid but running out of steam ahead of key swing highs at $57.89bbls

• WTI is back into bullish territory, opening above the daily close and printing fresh highs in the correction, albeit just shy of the Asian opening highs at the start of the week up at $57.64bbls.
• WTI is currently trading at $57.14bbls, up from a low of $56.46bbls and a touch below the session’s high of $57.40bbls.
• There is a significant verbal battle going on between Trump and OPEC and a number of geopolitical events on the go.

Trump stirred-up action in the marketplace when he recently tweeted that the price of oil was too high, calling out OPEC and jawboned the price lower sending oil sharply lower in its bull trend. However, the energy minister of Saudi Arabia, Khalid al-Falih, has more recently reiterated the Saudis country’s commitment to cut output to rebalance the market. Moreover, the minister was implying that production cuts could be extended into the second half of 2019. This has given the oil market a lift along with the Energy Information Administration reporting yesterday that U.S. crude supplies had unexpectedly dropped by 8.6 million barrels.  

On the data, analysts at TD Securities explained that it was a welcomed sign as market observers had begun to grow concerned about the recent rise in crude stocks. “Meanwhile, Cushing inventories continued to build amid refinery maintenance and as US production further increased to 12.1m bpd. In the medium term, we expect WTI and Brent will remain on an upward trajectory towards $60/bbl and $70/bbl respectively.”

However, China once again failed to deliver on data. Official China PMIs data is here: China Feb Manufacturing PMI 49.2 (vs. 49.5 expected) Manufacturing PMI 49.2 Non-Manufacturing PMI 54.3Composite PMI 52.4 – Such a result raises concerns over a demand slowdown. It was enough to weigh on the Global benchmark April Brent which expired at Thursday’s settlement off by 33 cents, or 0.5%, to $66.06bbls on ICE Futures Europe.  

WTI levels

Technically, the price has moved out of the danger zone in the 55 handle and away from trend line support levels down at 54.50. ATR offers some room to go on the upside although the 21st Feb fractal high located at 57.89 needs to give to encourage further commitment from the bulls en-route to challenge the 59 handle with sights on the psychological 60 handle – A probably B wave target in a new ABCD bullish formation, encouraged by stochastics on a monthly basis leaning with a bullish bias. However, for the time being, stochastics is overbought on a weekly, daily and 4hr time frame, turning lower on the near-term charts as upside momentum fades as the battle between bulls and bears kick in, making for a potential doji on the daily time frames.