WTI: Buyers undermine rig counts, tension in the Middle East
- WTI holds steady after four consecutive weeks of rising.
- The US “defensive strikes” and depletion in weekly oil rig counts fail to propel the oil prices further beyond Friday’s top.
- China’s PMI, trade/political headlines will be in the spotlight for now.
WTI falls short of extending the previous run-up while making the rounds to $61.80 amid the dull Asian session on Monday. The energy benchmark fails to respect to the US-Middle East tussle while also undermining the once in three-week depletion in the Baker Hughes weekly rig count data.
The US undertook what Pentagon termed as “defensive strikes” on Iraqi and Syrian spots after one of its civilian contractor died in the missile attack a few days back. The action, first of its kind recently, is a serious one that might push the Middle East authorities to make their threats real, which in turn pushes the Trump administration towards being ready for a bigger drama.
In doing so, the risk sentiment could dwindle and the black gold could extend its rise to a fifth week in a raw. Also supporting the sentiment is weaker US Dollar (USD), global supply cuts and cautious optimism surrounding the US-China trade deal. Further, a weekly report of the US oil rig counts from the Baker Hughes marked the decline of eight rigs to 677 for the period ended on Friday.
On the contrary, year-end sparse trading conditions, a lack of clear directions concerning the phase-one and the absence of major data/events limit likely market moves.
It should, however, be noted that Monday’s second-tier Purchasing Managers’ Index (PMI) data from the US and China’s official activity numbers, up for publishing on Tuesday, can entertain oil traders during the week.
Technical Analysis
Friday’s golden cross, a situation where 50-day Simple Moving Average (SMA) overtakes the 200-day SMA, needs to defy the near Doji candlestick formation by a daily losing above $62.00. This will lead the prices towards September month high surrounding $63.15. Failure to do so can trigger fresh pullback towards $60.00 round-figure.