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WTI: Libyan crisis help chart a gap-up opening, $60.00 in the spotlight

  • WTI holds on to recovery gains, backed by a week-start gap-up.
  • Libyan oil exports are stopped, the Berlin conference favors no external meddling.
  • Receding odds of the US-Iran war, the US off might trigger the pullback.

WTI begins the week’s trading with a leap from Friday’s close of $58.60 to $59.25. The black gold portrays the oil traders’ upbeat sentiment backed by the geopolitical crisis in Libya. However, the recent headlines from Germany and off at the US, coupled with no tension between the US and Iran, may question the bulls.

Bulls cheer geopolitical crisis…

The oil-rich nation is regaining the global attention for the first time after 2011’s overthrow of Col. Muammar el-Qaddafi. During the recent incidence, renegade military commander Khalifa Haftar blocked the Hamada-Zawiya oil pipeline, capable of removing 8,00,000 barrels per day of exports. Following the power play, global leaders met in Berlin and agreed that no external forces will be entertained and major powers are "fully committed" to a peaceful resolution in Libya.

Read: Pompeo sees progress towards ceasefire in Libya at Berlin summit - Reuters

Also favoring the oil prices is news from Iraq where violent protesters put a full-stop on the oil production of the Al Adhab field.

It should also be noted that the recent oil inventory numbers from the US have been upbeat while the Baker Hughes US Oil Rig Count registered a surprise increase to 673 from 659 prior.

While expected peace in Libya and sustained US dollar strength could cap the price gains, an increase in protests at Iraq might keep the bulls happy. However, a lack of liquidity could be witnessed as the US bourses will be closed due to Martin Luther King’s Birthday.

Technical Analysis

21-day SMA level near $60.40 and December 31 low around $60.70 can keep near-term upside restricted while mid-month low near $57.40 could restrict the declines.

 

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