WTI extends correction from 2-1/2 year highs at $ 60

• Underpinned by 2018 market outlook.
• Weaker USD remains supportive.

 WTI (oil futures on NYMEX) paused its 5-day rally and turned negative, correcting a part of yesterday’s rally to fresh two-and-a half year highs reached at $ 60.01.

WTI: Further upside still in play?

The barrel of WTI is seen extending its corrective slide towards $ 59.50 levels, after having faced rejection once again near the $ 60 mark, as markets now await the weekly US crude stockpiles data for the next move higher.

The black gold rallied hard a day before and tapped on the psychological level – $ 60 for the first time since June 2015, after the commodity reacted positively to the reports that an explosion occurred at a pipeline in Libya, which fuelled supply disruption concerns.

Reuters reports that Libya lost around 90,000 barrels per day (bpd) of crude oil supplies from a blast on a pipeline feeding Es Sider port on Tuesday.

Moreover, expectations of a tighter oil market heading into 2018 also lifted the sentiment around oil prices, with the latest EIA data suggesting a slight supply shortfall of 180,000 bpd for the first quarter of 2018.

Additionally, broad-based US dollar weakness also collaborated to the rally in oil prices. A weaker US dollar makes the USD-denominated oil cheaper for the foreign buyers and vice-versa.

Meanwhile, market paid little attention to the US drilling activity report released last Friday, with Houston oilfield services company Baker Hughes, having reported that oil rigs stayed steady at 747. All eyes now remain on the official US government crude inventory data for fresh momentum on oil prices.

At the time of writing, WTI drops -0.70% to $ 59.55 while Brent falls -1.20% t0 $ 65.66.

WTI Technical Levels

The resistances are aligned at $60.1 (2-1/2 year tops) ahead of $60.50 (psychological levels) and $61.82 (June 2015 tops). On the downside, supports are located at $58.91 (5-DMA), $58.20 (10-DMA) and $57.88 (Dec 22 low).”