Crude oil WTI fades $72.00 handle amid rising bond yields
- Crude oil retreats from the 72.00 handle amid US Dollar strength backed by rising US Treasury yields.
- The 10-year Treasury yield is trading in the 3.060 region which are levels not seen since summer of 2011.
Crude oil West Texas Intermediate benchmark is trading at around $70.50 a barrel down 0.60% on Tuesday.
In the first part of the European session, oil resumed its bull trend and hit almost the 72.00 psychological mark. However coinciding with the US retail sales release, crude oil spiked lower on the back of broad-based US Dollar strength triggered by rising US Treasury yields. In fact, the benchmark 10-year Treasury yield is trading at levels not seen since summer of 2011.
On the broader picture, the OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC agreement to cut supply since January 2017 combined with the prospects of sanction on Iran keep the oil prices in a strong uptrend.
Looking back, on May 8, the US President Donald Trump announced that he withdrew the US from the Joint Comprehensive Plan of Action, also known as the Iran nuclear deal. The market is concerned that new sanctions on Iran can lead to an oil supply squeeze of up to 500,000 barrels per day.
Crude oil WTI: 4-hour chart
The main trend is bullish and the bears strongly rejected the 72.00 handle suggesting a deeper pullback can be in the making. Immediate support is seen at 70.26 swing low and then at 69.51 swing low. To the upside, bulls will likely meet resistance at the 71.26 supply level and at the 72.00 handle. The market is trading above the 50, 100 and 200-period simple moving average suggesting an upward momentum.