WTI rallies +1.50% to test $ 56, US rigs count data eyed

• Rallies on profit-taking?
• Rising US output and doubt over Russia’s cuts extension to cap the rally?
• Eyes US drilling report.

WTI (oil futures on NYMEX) resumed its recovery mode from weekly lows and briefly tapped on the 56 handle, before easing slightly to enter a phase of consolidation just below the last.

WTI looks to regain $ 56.50

The black gold rallied hard in Europe, partly in response to fresh selling seen in the US dollar across its main competitors, as the US political jitters continue to weigh on the investors’’ minds. A weaker US dollar makes the USD-denominated oil less expensive for the holders in foreign currencies and vice-versa.

Moreover, a profit-taking rally in oil cannot be ruled, as we head towards the US rigs count data as well as a weekly closing, with the commodity on track to book the first weekly loss in six weeks.

Hence, it remains to be seen whether for how long the prices can hold the upside, as oversupply concerns continue to linger amid rising US oil output and storage levels, while doubts over whether Russia would support to extend the output cuts deal beyond March 2018 could also keep the sentiment underpinned behind oil.

At the time of writing, WTI jumps +1.40% to $ 55.88, while Brent rises 0.85% to $ 61.90.

WTI Technical Levels

Higher-side levels: 56.50 (psychological levels), $ 56.75 (Nov 14 high), $ 58 (round figure)

Lower-side levels: 54.84 (2-week lows), 54.40 (Nov 3 low), 53.89 (Nov 1 low).