WTI bounces off 12-week low to $55.60 amid risk reset
- WTI snaps three-day losing streak amid fresh headlines from the Middle East.
- News from Libya, Iran and Iraq suggest the US fight with the Arab world is far from over.
- Preliminary readings of global PMIs, risk catalysts in focus.
WTI pulls back from early-November lows while taking the bids to $55.60 during the Asian session on Friday. Downbeat inventory levels, fears of demand slowdown and an end to global production cut have recently weighed on the black gold. However, fresh headlines from the Middle East suggest the geopolitical tension to prevail.
The US-Middle East drama continues…
Be it Libya Gen Khalifa Haftar’s warning to target civilian planes as the top US-Iran envoy’s threat to kill late Iranian commander Soleimani’s successor are the top headlines that signal the fears of oil supply outage is still on the cards. Also portraying the US-Middle East tussle are the comments from the US special representative for Syria that mentions, “Any talks on troop withdrawal from Iraq must include all aids.”
News of Brazil to discuss cooperation with the OPEC and doubts over the global oil producers’ further support to the macro output cut policy dominated before a few hours.
Also signaling the cut in future demand were fears of China’s coronavirus that have so far taken lives off China while also spreading outside the dragon nation’s border.
With this, the market’s risk-tone seems to stabilize as traders concentrate more on the indicators supporting the reduction in supply than a likely decline in the demand.
On the economic front, numbers from the official Energy Information Administration (EIA) as well as private American Petroleum Institute (API) both registered an increase in the US inventories during their latest releases.
Moving on, preliminary PMI numbers from the US, Eurozone and the UK will be the key to watch during the rest of the day. Though, trade/political headlines will keep the driver’s seat.
Sellers look for fresh entry below the latest low of $54.79 whereas buyers will avoid entering any positions unless the quote rises past $57.50 that comprises the mid-month low.