Crude Continues Range Trading

Oil prices continue to trade within recent ranges to be down slightly on Tuesday as higher Libyan and Norwegian production offset tensions in the Middle East and Russia. Geopolitical issues have driven the prompt spread into a bullish structure recently. The stronger US dollar also weighed on prices (USD index +0.2%).

• WTI fell 0.3% to $74.51/bbl on Tuesday and has started the APAC session around that level. It fell to a low of $73.41 early in the NY session but then rose to a high of $75.25. Technicals remain bearish with the bear trigger at $68.28. Any rally is seen as corrective but the bull trigger is at $76.31.
• Brent fell 0.4% to $79.73/bbl. It broke above $80 during the APAC and NY sessions but couldn’t hold the moves. Key resistance is at $81.45 and the bear trigger at $72.67 with initial support at $74.79, Jan 3 low.
• Prices didn’t respond to the large inventory drawdown reported. Bloomberg stated that US crude inventories fell 6.67mn barrels in the latest week, according to people familiar with the API data. Gasoline rose 7.18mn but distillate fell 245k. The data is likely impacted by recent very cold weather which reduced output.
• The US conducted airstrikes on positions of Iran-supported rebels in Iraq who had attacked a US base. The US and UK also said they had hit Houthi sites on Monday to defend merchant shipping.