U.S. West Texas Intermediate and international-benchmark Brent crude oil reached a two-month high on Monday. The catalysts underpinning the market are a tightening U.S. crude market and the threat of sanctions against OPEC-member Venezuela.
At 0530 GMT, September WTI crude oil was trading $49.90, up $0.19 or +0.38% and October Brent crude oil was at $52.41, up $0.19 or 0.36%.
Today’s early strength has put the entire WTI curve close to the psychological $50 per barrel level, with only September and October a notch below that level.
A higher close today will mark the sixth straight session of gains.
In other news, according to the Commodity Futures Trading Commission, large speculators boosted their net positions in the WTI Crude Oil futures market last week. WTI speculative positions have risen for four consecutive weeks and by 96,150 contracts over that time frame. This puts the next position to its best level since April 18th.
Forecast
With U.S. inventories showing massive drawdowns over the past four weeks and Saudi Arabia pledging to reduce exports in August, the crude oil market is strongly supported.
Traders will continue to watch the American Petroleum Institute’s inventories report on Tuesday and the U.S. Energy Information Administration’s inventories report on Wednesday for direction, however, the main market driver this week may be the impending sanctions on Venezuela. They are almost certain to be oil-price supportive. They may also launch a volatile reaction to the upside.
WTI chart-watchers are likely to maintain their long positions as long as the market holds above the Fibonacci support level at $48.52. The key support level for Brent traders is $51.30.
This article was originally posted on FX Empire