WTI bulls holding on by the skin of their teeth

• Oil prices stabilising ahead of the Federal Reserve Bank meeting this week.
• WTI retests the 11.42/9.75 support area, a fall through which would target last week’s 6.50 low.

The price of a barrel of oil on Tuesday is more anchored than it has been of late, settling into a new norm as markets digest the status quo, while, fundamentally, not much has changed in the past week. At the time of writing, West Texas Intermediate crude (WTI) trades at $12.97 between a range of $10.27 and $13.78bbls.

Earlier in the day, US futures momentarily made fresh intraday highs due to the reports that a bomb on an oil tanker exploded in Syria. In a report by Reuters, it was told that an explosion in the northern Syrian city of Afrin killed at least 10 people, citing initial reports from Turkey’s state-run Anadolu news agency Tuesday. There has been no further news on that front but it was enough to cause a spike, bringing back some normality to a very disjointed market following the May contract's spike into negative territory.

"With only a few days until the OPEC+ commitment to curtail output formally begins, the global oil glut continues to batter markets, as storage constraints keep the pressure on prices. The fear of seeing negative oil prices again, however, has prompted many index providers and ETFs to shuffle their holdings in an attempt to protect themselves against the implications of this possibility," analysts at TD Securities explained. 

Fed in view

Looking ahead for the week, we have the Federal Reserve for which the US dollar will be a focus. The market has already priced in a dovish Fed leaving risk sentiment in the driver seat. With markets moving towards more of a risk-on approach, the USD could be weaker into month-end. The price of oil will likely be caught up in the broader risk-on market and potentially find what little support there is from higher equities. 

WTI levels

WTI Crude Oil - Retests the 11.42/9.75 support area, a fall through which would target last week’s 6.50 low.
ICE Brent Oil - Slips back towards minor support at 16.65 but is expected to hold above 15.98 this week at least.
ICE Gasoil - Continues to slide and nears the psychological 200.00 mark below which lies 195.75/186.75,

Analysts at Commerzbank explained.