WTI bears eye a continuation to test $70.50s

WTI bulls are in and have broken a 50% mean reversion level.
If the bears were to commit, then there will be prospects of a move into $70.50s.

Ross J Burland FXStreet

West Texas Intermediate, WTI, is currently trading at $71.93 and has traveled between a low of $71.03 and $74.33. Meanwhile, comments from Russia's oil minister, who said next month's OPEC+ meeting was unlikely to end with further cuts to production, have weighed on the black gold.

Reuters reported Russian oil minister Alexander Novak said further cuts from OPEC+ were unlikely following more than one-million barrels per day of voluntary cuts that took effect at the start of May.

´´The likelihood of OPEC cutting further only a month later is low. Signs of stronger demand should provide some comfort to bullish speculator,´´ analysts at ANZ Bank said. ´´Chinese demand is growing strongly as restrictions on international travel into China are eased. The rise in gasoline demand in the US comes ahead of the US holiday weekend.´´

Meanwhile, analysts at TD Securities explained that´´Saudi Arabia's warning shot to short sellers managed to squeeze CTA trend follower shorts, but only for a single trading session. WTI crude and Brent crude prices are now catching up with the ongoing deterioration in commodity demand trends, after a large-scale short covering program from algorithmic trend followers provided a sufficiently large offset for prices to buck the trend.´´

´´With price action already turning over, CTAs are likely to aggressively add back some shorts. In fact, we estimate that algos are set to add a whopping -21% of max size to their net short in WTI crude, along with -11% in Brent. This flow will help give credence to the slumping demand narrative, as China continues to battle with a surge in Covid-19 infections,´´ the analysts explained further.

WTI technical analysis

The bulls have moved in and are reaching a resistance area, breaking a 50% mean reversion level. If the bears were to commit, then there will be prospects of a move into $70.50s.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1870 during the Asian hours on Friday. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming steady momentum. RSI has eased but remains above 50, indicating momentum remains constructive for the bulls.

GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus

The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.

Gold recovers swiftly from weekly low, climbs back closer to $5,000 ahead of US CPI

Gold regains positive traction during the Asian session on Friday and recovers a part of the previous day's heavy losses to the $4,878-4,877 region, or the weekly low. The commodity has now moved back closer to the $5,000 psychological mark as traders keenly await the release of the US consumer inflation figures for more cues about the Federal Reserve's policy path.