DXY flirts with 2-week tops.
Drop in crude inventories offset by rising US crude output.

WTI (oil futures on NYMEX) regains the bid tone above $ 56 mark, as the bulls found support once again near $ 55.85 region in the European session.

WTI: Further downside in play?

Despite the latest leg higher in the black gold, the prices continue to trade within a tight range, as investors remain torn between a bullish EIA crude stockpiles report and soaring US crude output, in the wake of the shale boom.

The EIA crude inventory report showed that the US crude stockpiles fell by 5.6 million barrels in the week to Dec. 1, to 448.1 million barrels. Meanwhile, the US oil production climbed by 25,000 barrels per day (bpd) to 9.71 million bpd, the highest since monthly figures showing the US produced more than 10 million bpd in the early 1970s, as reported by Reuters.

Further, the relentless rise in the US crude output levels continue to undermine the OPEC’s and Russia’s efforts to rebalance oil markets, after they extended the output cuts by another six months last month.

In the day ahead, it remains to be seen if oil prices extend their recovery gains, as the US dollar continues to remain broadly bid, sitting at 2-week tops of 93.67. At the time of writing, WTI gains +0.48% to $ 56.22 while Brent also rises +0.48% to $ 61.52.

WTI Technical Levels

Higher-side levels: $ 56.82/75 (Nov 29 & 30 low), $ 57.50 (psychological levels), $ 57.92 (Dec 5 high)

Lower-side levels: $ 55.83 (2-week lows), $ 55.24 (50-DMA), $ 54.82 (classic S2/ Fib S3)

 

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