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WTI retreats to $77, ends three-day winning streak

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West Texas Intermediate (WTI) edged lower on Tuesday and snapped a three-day winning streak to the highest level since October 8.

The benchmark commodity traded with a negative bias around the $77.00 mark in the European session, though the fundamental backdrop warrants some caution before positioning for deeper losses.

The US Treasury Department on Friday imposed tougher sanctions against Russia’s oil industry, targeting nearly 200 vessels of the so-called shadow fleet of tankers, that threatens to tighten global supplies.

Adding to this, speculations that US President-elect Donald Trump’s administration may tighten sanctions against flows from Iran in the coming months should continue to support crude oil prices and validate the positive outlook for the commodity.

Meanwhile, the incoming US macro data pointed to a resilient economy.

Furthermore, expectations that Trump’s expansionary policies will boost fuel demand support prospects for a further appreciating move for crude oil prices. Apart from this, the ongoing US dollar profit-taking slide, prompted by retreating US Treasury bond yields and easing fears about Trump’s disruptive trade tariffs, suggests that the path of least resistance for the black gold is to the upside.

Traders now look forward to the release of the US Producer Price Index (PPI), which will influence the USD and provide some meaningful impetus to USD-denominated crude oil prices.

(Source: OANDA)