WTI Crude Oil (USOIL) Rebounds Above $60 as 3.6M Barrel Build Tests Supply Fears
Oil prices got a jolt on Friday as they began to regroup, with WTI clawing its way back to the $60 handle as traders rethought...
Quick overview
- Oil prices rebounded on Friday, with WTI approaching the $60 mark as traders reassessed supply and geopolitical risks.
- The recovery was fueled by renewed US warnings about Iran, raising concerns over potential supply disruptions.
- Despite a modest weekly gain, bearish US inventory data showing a significant rise in crude stockpiles limited further upside.
- Traders are closely monitoring key technical levels around $60, with a potential buy signal if prices sustain above this resistance.
Oil prices got a jolt on Friday as they began to regroup, with WTI clawing its way back to the $60 handle as traders rethought their near-term supply & risk concerns and geopolitical uncertainty. Both WTI & Brent took a 2% hit on Thursday as fresh data showed rising US stockpiles & weaker fuel demand.
The bounce-back was largely driven by renewed warnings from the US about Iran, reigniting supply disruption fears in a region that’s still vital to global oil flows. Iran ranks as the 4th-largest OPEC producer and still supplies a decent chunk of China’s oil – the world’s second-biggest oil consumer. Even without anything major happening right now, the heightened rhetoric is starting to add extra risk to the price, especially when inventory & demand signals are all over the place.
By the end of the week, Brent and WTI were still looking at a modest gain of about 0.6%, a market that’s super sensitive to any headlines but refuses to really price in any escalation.
US Inventory Data Brings the Upside to a Halt
Still, the upside was contained by some pretty bearish-looking supply data from the US. The EIA reported that crude stockpiles had risen by 3.6 million barrels in the week ending 16th January, well above analysts’ expectations of a 1.1 million barrel build.
And to make matters worse, it was even higher than the 3 million barrel increase reported by the API just a day earlier. The figures just reinforce the fears that fuel demand is slowing, as seasonal demand drops off and refining margins tighten up.
Together, the big inventory build and the softer demand backdrop explain why oil struggled to sustain the gains despite the geopolitical boost.
WTI Technical Analysis: $60 Becomes the Line in the Sand
From a technical perspective, WTI is showing some initial signs of stabilising. The price is bouncing around $60.20, having defended a rising trendline from the $55.99 low on the 4hr chart. Lately, buyers have been stepping in around $59.20-$59.50, an area that’s reinforced by the 50-EMA and prior consolidation.
For the time being, as long as WTI stays above $58.90 (where the rising 200-EMA sits), the overall structure remains looking pretty constructive. On the upside, the first serious resistance is at $60.90, then comes $62.30, the previous swing high.
Momentum indicators are in line with the bounce:
- The RSI has bounced back up to the mid-50s.
- Selling pressure is easing, not picking up pace.
- Price action is looking more like a consolidation than a breakdown.
What Traders Are Keeping An Eye On
Now markets are at a bit of a crossroads, weighing up:
- Geopolitical supply risks
- Rising US stockpiles
- Key technical levels around $60
A sustained move above resistance could get things moving again, while failure to hold trend support would shift the focus back to the upper-$50s.
Trade idea (short-term):
- Buy above $60.00 and target $60.90
- Stop below $59.20
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