WTI refreshes session tops, moves back above mid-$48.00s

• A combination of supporting factors assisted WTI crude to attract some dip-buying on Monday.
• Lingering worries about fuel demand recovery might cap any strong gains for the commodity.
• Holiday-thinned trading conditions further warrants some caution for aggressive bullish traders.

WTI crude built on its steady intraday move up and climbed to fresh daily tops, around mid-$48.00s during the early European session.

Spot prices quickly reversed an early dip to the $47.55 region after the US President Donald Trump signed a $2.3 trillion coronavirus aid and spending package. The news added to the optimism over a last-minute Brexit deal and boosted investors confidence. This, in turn, weighed on the safe-haven US dollar and extended some support to dollar-denominated commodities, including oil.

However, lingering worries about a recovery in the global fuel demand might hold investors from placing aggressive bets and keep a lid on any runaway rally for WTI crude. Investors turned cautious over the prospects for demand recovery following the discovery of a new faster-spreading variant of the coronavirus and the imposition of stricter lockdowns/travel restrictions in the UK.

Apart from this, relatively thin trading volumes on the first day of a holiday-shortened week might further collaborate towards capping gains for the black gold. That said, some follow-through buying beyond the $48.60 region (Friday’s swing high) could push WTI crude further beyond the $49.00 mark, back towards retesting multi-month tops, around the $49.20-25 region touched earlier this month.

Technical levels to watch