WTI turns negative near $ 56.70, US drilling report weighs

• USD rebound picks-up pace.
• A rise in the US rigs count weighs negatively.
• Middle-East tensions lend support.

WTI (oil futures on NYMEX) remains on the defensive for the second straight session on Monday, in the wake of rising US crude output and rigs, which outweigh concerns over supply disruption amid ongoing Middle-East tensions.

WTI: A test of $ 58 still on the cards?

The black gold largely subdued, moving further away from the 57 handle, as the US dollar recovery gathers steam across its main competitors in Europe. The USD index advances further to 94.50 levels, up +0.22% on the day. A stronger US dollar makes the USD-denominated oil more expensive for the buyers in foreign currencies.

Moreover, with the number of rigs having increased by 9 in the US last week, market view it as a sign of the US oil producers are preparing to increase the output levels further at current prices. The total rig count is up to 738, Baker Hughes Oil Field Services Company noted on Friday.

However, the retreat appears restricted, as the oil bulls derive some support from the ongoing Middle-East tensions and increased hopes of the OPEC cuts deal to be extended beyond March 2018. At the time of writing, WTI trades marginally lower at $ 56.70, while Brent trades flat near $63.50.

OPEC Sec Gen Barkindo: Oil market rebalancing at accelerating pace

WTI Technical Levels

Higher-side levels: 57.69 (Nov 7 high), $ 57.91 (multi-month highs), $ 58.50 (psychological levels).

Lower-side levels: 56.50 (psychological levels), 56.00 (key support), 55.66 (Nov 6 low).