WTI challenges $59.00 ahead of Baker Hughes

• WTI loses the grip further and revisits the $59.00 area.
• Easing geopolitical tensions, US supplies weigh on crude prices.
• US oil rig count coming up next.

Prices of the WTI are prolonging the sell-off at the end of the week and are retesting the area of weekly/yearly lows in the $59.00 neighbourhood.

WTI now looks to US data

Prices of the barrel of the American reference for the sweet light crude oil remain well on the defensive for the fifth session in a row on Friday and are about to post the largest weekly loss since mid-July.

In fact, prices of the WTI are navigating the 61.8% Fibo retracement of the December-January rally around the $59.00 region, coming down under heavy pressure exclusively in response to mitigated geopolitical fears in the Middle East.

Also weighing on prices, the EIA unexpectedly reported a nearly 1.2M build in US crude oil supplies during last week on Wednesday vs. traders’ expectations of a 3.6M barrel drop.

Later in the session, Baker Hughes will publish its weekly report on the US drilling activity.

What to look for around WTI

The US-China trade developments have been relegated to a secondary role as driver of the price action in the oil markets in favour of the (now diminished) effervescence in the Middle East. The sharp correction lower in prices came after traders appear to have somewhat overestimated the potential consequences of the US-Iran conflict, particularly in regard to supply disruptions. That, plus the fact that both countries have dialled down a probable bigger confrontation in past hours, have quickly dragged prices from multi-month peaks in the proximity of the $66.00 mark per barrel to the sub-$59.00 area, recording at the same time new yearly lows.

WTI significant levels

At the moment the barrel of WTI is losing 0.90% at $59.06 and a break below $58.67 (2020 low Jan.9) would open the door to $58.46 (55-day SMA) and then $57.77 (200-day SMA). On the upside, the next hurdle aligns at $60.53 (50% Fibo of the December-January rally) seconded by $61.74 (50% Fibo of the December-January rally) and finally $65.66 (2020 high Jan.8).