WTI climbs to 3-week highs near $56.00 on geopolitics

• WTI moves higher and surpasses the $55.00 mark.
• US supplies dropped more than expected, according to EIA.
• Iran-US tensions fuel the upside in prices.

Prices of the barrel of the American reference for the sweet light crude oil are edging higher today and are approaching the key $56.00 mark amidst rising geopolitical concerns.

WTI up on US-Iran, supplies

Crude oil prices are prolonging the weekly recovery and are trading at shouting distance from the key barrier at the $56.00 yardstick today, gaining nearly 3% on the back of heightened geopolitical jitters and a drop in crude oil investories.

In fact, tensions between Iran and the US remain far from abated today after Iran said it shot down a US military drone, while the EIA reported on Wednesday a larger-than-expected draw in US crude oil supplies during last week.

In the same line, the Federal Reserve has opened the door to potential rate cuts in the next months, also sustaining the improved sentiment in the risk-associated complex and therefore lending extra legs to the rally in oil prices.

What to look for around WTI

Geopolitical jitters, including the recent attacks in the Gulf of Oman and today’s incident with a US military drone have been lending extra support to prices as of late, all coupled with somewhat alleviated trade concerns after President Trump opened the door to a potential meeting with China’s Xi Jingpin at the G20 event next week. Also bolstering the upbeat sentiment among traders are positive drivers coming in from the supply side, including the tight US market, the OPEC+ agreement (and potential extension) to curb oil production and the so-called ‘Saudi put’.

WTI significant levels

At the moment the barrel of WTI is advancing 2.75% at $55.67 and a breakout of $57.19 (38.2% Fibo of the December-April rally) would aim for $58.47 (100-day SMA) and finally $58.85 (200-day SMA). On the flip side, the next down barrier arises at $50.54 (monthly low Jun.5) seconded by $47.39 (78.6% Fibo of the December-April rally) and finally $44.23 (2019 low Jan.2).