- Tensions in the Middle East propelled WTI above $ 60, to new yearly highs.
- WTI retreats from the highs, still climbing 2% in the European session.
- Optimism about vaccines and US stimulus keep hopes of economic recovery alive.
The WTI (futures on NYMEX) is retreating from the highest levels since January 2020 reached in the region of $ 60.95, now trading around $ 60.50 and up 1.80% on the day.
Last week’s 5% rally in black gold accelerated this Monday, when the price exceeded the critical level of $ 60 for the fear of rising tensions in the Middle East.
According to the news, the Saudi-led coalition fighting in Yemen intercepted and destroyed an explosives-laden drone fired by the Iran-aligned Houthi group towards the kingdom, escalating geopolitical tensions in the Middle East.
What’s more, the rapid launch of covid vaccines globally, combined with the possible reduction of blockages induced by the virus in major economies, has fueled hopes for a faster economic recovery, which in turn has revived expectations of recovery in oil demand and it has raised the price of a barrel of WTI.
Sentiment around black gold continues to be supported by a sharp drop in US stocks, the American Petroleum Institute (API) reported Tuesday night.
API data showed that US crude inventories fell 3.5 million barrels in the week through February 5 to about 474.1 million barrels.
From a broader perspective, US oil remains backed by the extension of oil production cuts by OPEC and its allies (OPEC +) and Saudi Arabia’s voluntary production cuts this month and next.
Markets are looking forward to weekly US crude inventory data for further trading momentum. Meanwhile, developments in the Middle East and news about the stimulus will be closely followed.
WTI technical levels
“The prior year high of $ 65.45 is in the spotlight, while the September 2019 high around $ 63.15 and the December 2019 high of $ 62.25 are also attracting market attention. However, it should be noted that a break below $ 59.54 will need to break below the 10-day SMA level at $ 57.60 to see short-term WTI bears enter, ”notes FXStreet analyst Anil Panchal.
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