Crude Lower On Stronger USD, Ample Supply & Continuing Gaza Ceasefire Talks

Oil prices were already trending lower before the greenback strengthened after US payrolls significantly overshot expectations on Friday. They ended the day over a percent lower to be down sharply on the week. Continued excess supply and soft demand concerns weighed on oil, and while Middle East tensions are in the background, talk of a Gaza ceasefire also impacted crude. The USD index rose 0.6%.

• WTI fell almost 2% on Friday to $72.41/bbl to be down 7.2% on the week. It rose to a high of $74.52 in the European morning and then fell to $71.79 following payrolls. It is now below the 50-, 100- and 200-day moving averages, which has triggered some selling. It is approaching initial support at $70.62, January 17 low. The prompt spread is now bearish signalling ample supply.
• Brent is down 1.3% to $77.67/bbl and is 6.4% lower on the week. It approached $80 making a high of $79.44 but then fell to an intraday low of $76.85, breaking below support at $78.57 and approaching $76.13, January 17 low.
• The US struck Iran-backed rebel positions in Iraq and Syria on Friday following a drone attack that killed 3 US troops. There was also a joint US-UK attack on Houthi positions on the weekend.
• The Baker Hughes rig count fell 2 in the latest week to the lowest since mid-January and down 16.7% y/y. Oil was steady with the drop in the gas sector.