WTI bounces-back above $ 65 mark

• Underpinned by hopes of tighter markets.
• Will it manage to keep the $ 65 mark?

WTI (oil futures on NYMEX) is seen extending yesterday’s solid comeback staged following the release of the US EIA crude inventories data, as the bulls now look to extend the upturn well beyond the $ 65 mark.

Despite, the recent corrective slide seen earlier this week, the sentiment around the black gold remains underpinned by increased expectations of tightening crude supplies this year, as the OPEC- Russia oil output cuts deal extension continue to negate the impact of rising oil prices.

The EIA, in its latest report, said the US crude oil production in November surpassed 10 million bpd for the first time since 1970 and neared the all-time output record. However, a bigger-than-expected drop in the US gasoline stocks offset the build in the crude inventories, helping the prices to stabilize in the overnight trades.

The barrel of WTI moved-continues to meet fresh supply near the midpoint of the 66 handle, as a rise in the US rigs continue to indicate rising US oil production levels. The US energy companies added 12 oil rigs drilling for new production last week, taking the total to 759.

Moreover, a weaker US dollar across the board combined with strengthening Chinese oil product demand boosted the bids around the commodity. China’s state oil company, Sinopec, said in its annual report released today, China’s domestic oil product demand will rise by around 3% this year and its gasoline consumption will hit a peak between 2025 and 2030, according to Reuters.

Focus now shifts towards the key US drilling activity report, with the number of rigs counts likely to have a significant impact on the prices in the near-term.  At the time of writing, WTI rises +0.60% to $ 65.14 while Brent gains +0.63% to $69.31.

WTI Technical Levels

The resistances are aligned at $65.56 (Jan 30 high) ahead of $66.66 (3-year tops) and $ 67 (psychological levels). On the downside, supports are located at $64.53 (20-DMA), $64.10 (classic S1) and $63.50 (key support).