WTI retreats from tops, back near $48.00

Crude oil prices are now surrendering part of the initial spike, with the barrel of West Texas Intermediate deflating to the vicinity of the $48.00 mark after climbing to fresh daily highs near $48.60.

WTI up on geopolitical jitters

Prices for the WTI picked up pace at the beginning of the week after Saudi Arabia, UAE, Bahrain and Egypt cut diplomatic ties with Qatar, which has been accused of supporting terrorist groups in order to destabilize the region.

Crude oil prices are so far reverting a 4-session negative streak after the news, as traders consider the likeliness of supply disruptions in the Middle East if the current effervescence continues to gather pace.

In the meantime, crude prices stay under pressure as market participants continue to gauge the recent extended OPEC deal against rising US oil production, with the spectre of the supply glut always hovering over markets.

In that regard, driller Baker Hughes reported on Friday that US oil rig count went up by 11 to 733 active oil rigs during last week, something that continues to weigh on traders’ sentiment and carries the potential to counteract the target of the current OPEC output cut agreement.

On the positioning front, crude oil net longs have climbed to 6-week tops during the week ended on May 30, according to the latest CFTC report.

WTI levels to consider

At the moment the barrel of WTI is up 0.67% at $47.98 facing the next hurdle at $48.42 (high Jun.5) followed by $48.97 (20-day sma) and then $49.72 (200-day sma). On the flip side, a breakdown of $46.91 (61.8% Fibo of the May rally) would aim for $46.74 (low Jun.2) and finally $45.70 (76.4% Fibo of the May rally).