US equity markets rebounded on Tuesday as strong US corporate earnings lifted confidence over the global outlook. 

United Technologies, Caterpillar and 3M announced encouraging earnings reports on Tuesday, sending the Dow Jones Industry Average up 0.7% to a record high of 23,441 points. Favourable earnings helped to underpin the negative impact of tensions between President Trump and his party with regard to tax-reform plans. 

US dollar index December contracts climbed for a third day to the 93.85 area, while the euro and yen remain weak due to political uncertainties in Catalonia and Abe’s election victory respectively.  

The WTI crude oil price extended its gains to a 13-month high in the US$52.20 area, as the market speculated over the possibility that OPEC will extend its production freeze after the current agreement expires on 18 March. Data from the American Petroleum Institute showed that gasoline stock dropped by 5.75 million barrels last week. This suggests an ongoing drop in US stockpiles, as major refineries have resumed production after the disastrous hurricanes in September. 

The oil price is riding an uptrend and the rally could continue if OPEC confirms it will extend production cuts next month. Technically, WTI oil is challenging an immediate resistance level in the US$52.2 area. Breaking out above this level will open room for upside toward the next resistance at US$54.0.

Technical Analysis:

Crude Oil West Texas - Cash

  • 10-Day Simple Moving Average and SuperTrend (10,2) both sloped upwards
  • Challenging 78.6% Fibonacci Extension level of 52.2 area, which is also the previous high in September 
  • The next resistance level is at around the 54.0 area (100% Fibonacci Extension)

 
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