Crude oil prices are sharply lower at the beginning of the week, with the barrel of West Texas Intermediate testing lows in the $53.20 region.
WTI lower on USD bid tone, rig count
Traders turned bearish on crude oil following a moderate rebound in the greenback, pushing the US Dollar Index (DXY) back around the critical 100.00 handle as market participants seem to have left behind the mixed results from the US labour market.
In addition, concerns over the possibility that US oil producers could ramp up their output have re-emerged after driller Baker Hughes reported on Friday US oil rigs increased by 17 to 583 during last week (the largest level since November 2015).
The pick up in US shale production could offset the recently implemented oil output cuts by OPEC and non-OPEC countries, as per the agreement clinched in late November.
WTI remains well supported from the positioning side however, as speculative net longs remained at record levels during the week ended on January 31, according to the latest CFTC report.
WTI levels to consider
At the moment the barrel of WTI is losing 0.91% at $53.34 and a breach of $52.70 (20-day sma) would aim for $52.24 (low Jan.31) and then $51.89 (55-day sma). On the upside, the next hurdle is located at $54.22 (high Feb.3) followed by $54.34 (high Feb.2) and finally $55.24 (2017 high Jan.3).
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