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WTI moving to the $53 handle with eyes on R3

  • West Texas Intermediate oil has run up to test R1 and through the 21-hr SMA located at 51.62 having made a high of 53.06 from a low of 50.57.
  • The black gold has been resilient to the dollar's upside pressures that had otherwise weighed on the broader commodity complex midweek. 

As for the futures, they too have seen a spike in prices and settled almost 3% higher on the news that Saudi Arabia plans to slash shipments to U.S. refiners and prevent the buildup of American crude stockpiles. "Saudi Aramco warned U.S. refiners to brace for a steep drop in cargoes next month," Bloomberg reported, citing people briefed on the plans of the state-controlled oil company. 

Global growth remains steadfast

"Notwithstanding OPEC's production agreement and the continued outage at Libya's largest oil field, reports of infighting among members have raised some doubts about compliance with the deal," analysts at TD Securities explained, adding, "We think it comes as no surprise that Iran’s oil minister voiced discontent and as US inventories begin to draw, and global growth remains steadfast, the narrative should turn positive and send prices substantially higher from here. For the moment, however, prices have a long way to go before CTAs significantly flatten out their positions and cover a portion of their shorts."

WTI levels

Technical indicators are sharply higher with the daily RSI extending its advance from oversold territory while the 4hr approaches overbought. However, the broader trend remains in a bearish region with candles on the weekly charts directionless and drifting sideways below last week's highs of 54.70. The 123.6% Fibo extension target comes in at the 43.90s while the June 2009 lows are nearby at 41.83. Further out, the 161.18% Fibo extension target is placed at 33.77, and the Jan 2016 low is found lower down at 26.03. On the upside, a close above R1 on a spot basis this week will leave prospects open for a test of R3  at 54.55 guarding the confluence of the 4hr 200 SMA and the 23.6% Fibo at 55.92. 

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