WTI back above $ 65 mark, but for how long?

• Negative start to the week, $ 63.50 back on sight?
• Bearish fundamentals continue to weigh.

WTI (oil futures on NYMEX) extends its bearish momentum for the second straight session, as the hopes of tighter markets in 2018 were squashed by rising US output levels and risk-off market profile.

WTI awaits US crude supplies data

The barrel of WTI attempts a tepid recovery, as the bulls try hard to extend the recovery mode above the $ 65 mark, as sentiment remains dampened by the latest US government report released last week, which showed that the output climbed above 10 million barrels per day in November for the first time since 1970.

Moreover, an addition of six rigs in the week to Feb. 2, bringing the total to 765, also collaborated to the downbeat tone around oil prices. Baker and Hughes oilfields services report showed that the US companies added oil rigs for a second week in a row last week.

Meanwhile, higher-yielding oil also suffers from widespread risk-aversion, as reflected by tumbling global stocks amid rising inflation expectations, in the wake of upbeat US wages data.

In an evidence of diminishing confidence in the black gold, hedge funds and money managers trimmed last week their bullish bets on WTI by 18,365 contracts to 531,235 in the week to Jan. 30, the latest CFTC COT report revealed.

Markets now look forward to the weekly crude inventories report due out from the US later this week for fresh trading impetus. At the time of writing, WTI drops -0.60% to $ 65.06 while Brent loses -0.66% to $68.12.

WTI Technical Levels

The resistances are aligned at $65.40 (10-DMA) ahead of $66.30 (intermittent tops) and $66.66 (3-year tops). On the downside, supports are located at $64.75 (20-DMA), $64.47 (Feb 2 low) and $63.67 (Jan 31 low).