- WTI wavers around intraday high amid a quiet session.
- Iraq is up for production cut to compensate for breach of the OPEC quota.
- Fears of virus variant, doubts over US fiscal stimulus challenge the risks.
WTI prints 0.30% intraday gains while taking rounds to $52.30 amid Monday’s Asian session. While weekend news suggesting output cut from Iraq favor the oil bulls, doubts over the US coronavirus (COVID-19) stimulus and the worsening virus conditions cap the upside moves.
Bloomberg came out with the news suggesting Iraq’s planned oil output cut in January and February by around 0.25 million barrels per day of production to 3.6 million barrels. While Baghdad’s slowing down of oil flow is mainly due to its inability to respect the OPEC’s targets, Kurdistan’s action will be the key to follow.
Read: Iraq will cut oil output to compensate for breach of OPEC+ quota - Bloomberg
Other than the weekend news, risk consolidation also backs the energy buyers by press time. The S&P 500 Futures gain 0.30% and stocks in Asia-Pacific also print mild gains during early Monday.
Although fears of the quickly spreading virus strain weigh on risk-tone, recently positive signs over the looming US fiscal package seem to have favored the latest optimism. It should, however, be noted that the gridlock over the US aid package hasn’t been solved yet, which in turn keeps the risks pressured while the virus variant suggests more lockdowns from the key economies in the West.
Read: US Senator Sanders: Democrats will use reconciliation to pass Covid-19 relief package – CNN
Looking forward, a light calendar before the US session keeps WTI prices at the mercy of risk catalysts. Though, cautious optimism for the American covid aid package, backed by improving conditions in China, favors the commodities.
Technical analysis
Although sustained trading beyond 21-day SMA, at $51.00 now, keeps WTI buyers hopeful, a downward sloping trend line from Wednesday, currently around $52.85, guards the quote’s short-term upside moves.
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