West Texas Intermediate crude prices extended their recovery during yesterday’s session as the bulls cheer the rising risks of supply disruption from major Mid-East oil exporters. Supply challenges from Iraq, the OPEC’s second largest producer, emerged following deadly anti-government unrest. Ayham Kamel, Eurasia Group’s practice head for the Middle East and North Africa, said: “Iraq’s oil exports of 3.43 million barrels per day (bpd) from Basra terminals could be disrupted if instability lasts for weeks”, as cited by Reuters. However, the rallies in the black gold appear short-lived, in the wake of the recent US-China pessimism that tempers the appetite for higher-yielding assets such as oil. Meanwhile, the restoration of the Saudi oil production capacity is also likely to keep the sentiment undermined.
Crude oil prices started to correct during Friday’s session following a technical bullish candlestick pattern supported by a divergence between the price and the momentum. The price is currently trading just below the $53.26 resistance level after yesterday’s surge towards the $53.89 resistance level. We will keep focusing on the upside if the price breaks above near resistance level. The next level we will be watching is the $54.42 resistance level.
Support: 52.5/ 51.83
Resistance: 53.26/ 53.89