- West Texas Intermediate prices were trading -0.22% lower in the Wall Street close.
- West Texas Intermediate crude for October delivery lost by 4 cents, or 0.07%, to finish at $58.09.
- Can Saudi production be restored?
West Texas Intermediate prices were trading -0.22% lower in the Wall Street close having edged lower from a high of $59.23 to a low of $59.97 while futures registered a sharp gain for the week, 6% higher and considerably higher on the attacks on Saudi Arabian production facilities last weekend which put into question how much spare capacity there will be left in the oil market leading to the biggest weekly gain in 3 months.
As for futures, West Texas Intermediate crude for October delivery lost by 4 cents, or 0.07%, to finish at $58.09 a barrel on the New York Mercantile Exchange. The contract logged a 5.9% weekly advance, which was the biggest for the U.S. benchmark since the week ended June 21.
Saudis revealed the extent of damages
Oil eased back from the opening highs for the week through the 63 handle on the sentiment that Saudi production would be back to full capacity by the end of this month, according to official announcements made very early on after the first report of the weekend attacks. However, Saudis then revealed the extent of damages and the market now questions how quickly production can, indeed, be restored which will make for a volatile time ahead.
“In that context, energy market participants are anxiously awaiting an announcement from the Saudis on the geographic location of the cruise missiles launches which targeted the nerve center of the Kingdom’s energy complex, along with any details about Pompeo’s coalition response, which they hope will be peaceful,”
analysts at TD Securities explained:
“That being said, we think crude oil is not ripe for unconditional love, and suspect that WTI prices ranging in the $58-60/bbl region seem appropriate for now. On the CTA front, trend followers are set to ramp up selling below $59.30/bbl, while in contrast, CTAs could cover shorts above $64.14/bbl.”
The price dropped back from the 127.20% Fibonacci extension of the July swing highs to Aug swing lows and remains on the 58 handle, for the most part, rejected on attempts beyond the 59 handle. A break to the downside will open prospects for the 61.8% Fibo and Aug resistance just below the 57 handle. On a re-escalation of fundamentals, the April highs at 66.58 will be a key target.