WTI struggles to keep $60.00 even as deep freeze cuts US oil output by a third, API data eyed
- WTI fades recovery moves from $59.35, stays near 2020 high.
- Oil production from Texas’s Permian Basin drop 65% amid freezing temperature.
- US dollar strength battle economic recovery hopes, stimulus expectations to confuse traders.
- API inventories will be important but risk catalysts, supply updates be the key.
WTI eases from the late Tuesday's top surrounding $60.30, currently around $60.15, while trying to extend recovery moves to Wednesday’s Asian session. In doing so, the black gold battles the US dollar gains and supply outage from Texas.
Despite the US dollar’s notable recovery moves from the monthly low, the energy benchmark keeps buyers hopeful as the latest drop in the US temperature cut oil supplies from Texas’s Permian Basin. Bloomberg mentions the loss as high as 65% of output, nearly 3.5 million barrels a day.
Also favoring the oil bulls could be Russia’s export curbs and Libya’s production declines, as well as Saudi Arabia’s voluntary reduction in output.
Furthermore, hopes of the US covid stimulus and global economic recovery, backed by the strong vaccinations, join the recent increase in the US activity numbers to offer extra strength to the energy buyers.
On the contrary, the US dollar’s sustained run-up from the monthly low, as well as anticipated further upside in the US Treasury yields, challenges the commodity prices.
Against this backdrop, the Australia and Banking Group (ANZ) said, “With the US weather expected to ease in coming days, the focus will return to global tightness. Constraints on OPEC supply continue to erase the global oil surplus, but there are signs that the recent rebound in demand is easing. Air traffic and road congestion over the Lunar New Year holiday in China is significantly below normal, after the government advised people not to travel, because of the pandemic.”
Looking forward, the weekly US oil stockpile data from the American Petroleum Institute (API), prior -3.5 million barrels, will offer immediate direction. It should, however, be noted that risk news and demand-supply updates will be the key.
Technical analysis
Late-January 2020 top near $59.30 precedes the weekly support line, at $59.24 now, to restrict the WTI oil’s short-term downside. Meanwhile, bulls need a fresh yearly high, above $60.80, for re-entry.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
