WTI: Positive start to the week amid trade hopes, will it sustain?

WTI (oil futures on NYMEX) kicked-off the brand-new week on a positive note, hitting fresh five-day highs at 56.41. But backed-off quickly amid a lack of fresh catalysts and holiday-thinned markets, as Japanese markets are closed on a National holiday.

Despite the pullback from multi-day tops, the black gold manages to hold above the 56 handle, regained on Friday. The prices surged over $ 2 last Friday after the US and Chinese trade negotiators announced: “enormous progress” toward reaching a “phase one” agreement that lifted the overall risk sentiment and boosted the demand for the risk/ higher-yielding assets.

Further, the sentiment around the barrel of WTI was also buoyed by the broad-based US dollar weakness, triggered following the disappointing US manufacturing sector activity reports that doused the US jobs data-led USD rally. In the Asian trading so far, the US dollar continues to remain broadly weaker amid the post-FOMC and US data follow-through. A weaker US dollar makes the US-denominates oil more attractive to foreign buyers.

Adding to the bullish tone around the commodity, the Russian output cuts have surpassed the pledged cut in October, as per the OPEC+ deal, according to the Russian Energy Minister Novak. Also, a drop in the US oil rigs count data also remains oil-supportive.

Despite the positives, the oil markets remain at the mercy of the US oil supply reports and broad market sentiment amid ongoing trade and geopolitical developments.

WTI Levels to watch