WTI stays above 200-day SMA as risk tone recovers, Iran poses threats
- WTI seesaws around $58.00 amid broad risk-on, strong USD.
- Geopolitical tension surrounding Iran keeps risk aversion on cards.
- Hong Kong election results show pro-Democracy candidates in the lead.
With the market’s risk sentiment recovering off-late, WTI refrains from extending the previous declines while trading around $58.00 during Monday’s Asian session.
The black gold reacts positively to the news that Hong Kong’s Democratic candidates are leading on more than half of 452 district council seats during the latest local election result counting. The same is likely to tame the deadly protests that rocked the Asian economy off-late.
Also contributing to the energy benchmark’s strength is the AFP news that relied on the Israeli Prime Minister Benjamin Netanyahu’s comment that Iran is planning attacks against the Jewish state and everything possible would be done to prevent them. Additionally, news from Aljazeera mentions states that Iran has caught some mercenaries and claim that the United States (US), Israel and Saudi Arabia took advantage of the recent protests in the country.
With this, the US 10-year treasury yields take rounds to 1.77% while the S&P 500 Futures also marks 0.17% gains with 3,118 being the quote.
On the data front, a weekly release of the Baker Hughes US Oil Rig Counts declined for the fifth consecutive time on Friday. Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, mostly known as OPEC+, are likely to keep the production cuts on the cards at its December meeting, which in turn acts as a price positive news after the initial speculations that Russia will step back from further reduction in the output.
Even so, the US dollar (USD) strength keeps the check on commodity prices and hence any recovery in the trading sentiment, needs to be analyzed properly for further direction.
Technical Analysis
While 200-day Simple Moving Average (SMA) around $57.60 acts as immediate support, the quote needs to cross the monthly top near $58.80 to aim for $60.00, if not then last week’s low of $54.89 can flash on sellers’ radars.