- A 10% drop in US crude output powers WTI to fresh yearly highs.
- Reflation trade drives US Treasury yields through the roof.
- OPEC+ weighing a slight output increase limits the advance.
WTI (futures on NYMEX) has reversed to near the $63.50 region after refreshing 13-month highs at $63.78 in the last hour.
The pullback could be seen as sign of slight bullish exhaustion, as the buyers catch a breath before gathering pace for a break above the $64 mark. The US oil remains on track for a weekly gain after settling the previous week in the red zone.
The black gold continues to draw support from the Energy Information Administration’s (EIA) weekly report published Wednesday, which showed that US crude output dropped by 10%, as refining runs hit the lowest levels since 2008 due to a winter storm in Texas.
Further, the risk-on rally in global equities, in the wake of the reflation trade, lends support to the riskier asset oil. Although the further upside appears to have stalled for now, as the surging US Treasury yields dull the attractiveness of oil as an alternative higher-yielding asset.
Also, reports that OPEC and its allies (OPEC+) are planning a modest boost to the oil output by 500,000 barrels per day (bpd), also keep the investors unnerved. Attention now turns towards the US durable goods data and GDP report for fresh trading impetus on the USD-sensitive oil.
WTI: Technical levels
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