Whilst many commodities reacted strongly to the US employment data on Friday, with a consequent surge higher on US dollar weakness, oil prices failed to follow suit. The WTI contract closed the session marginally lower at $48.33 per barrel and off the high of $49.41 per barrel, thus continuing to trade in an extended consolidation phase.
In early trading today however, oil has picked up the bullish tone once again as it prepares to take yet another run to the $50 per barrel region with the contract at time of writing trading at $49.65 per barrel.
Rig count was once again up last week rising by 9 to 325, thereby helping to provide additional support to the recovery for oil. With the US dollar now coming under increasing pressure as the prospects for a rate increase appear to diminish, this may be the catalyst that is required to drive oil through this psychological level, and on towards the next region of resistance which awaits in the $53.02 per barrel area.
Last week’s oil inventories also helped to confirm demand, and whilst the draw of -1.4m bbls fell short of expectation at -2.7m bbls, nevertheless provided further evidence of an improving supply/demand relationship.