Crude oil futures weekly recap: March 16 – March 20

West Texas Intermediate and Brent crude rose on Friday, with the European benchmark snapping two straight weekly losses, as a weaker dollar eased pressure on dollar-denominated commodities, while the number of active US rigs targeting oil slid for a fifteenth straight week to the lowest in over four years.

US crude for delivery in May rose 2.28% on Friday to settle the week 1% lower at $46.57 a barrel, having fallen on Wednesday to a six-year low of $44.03. The April contract, which expired on Friday, jumped 2% for the week, its first weekly advance in five.

Meanwhile on the ICE, Brent for settlement in May gained 1.64% on Friday to close the week nearly 0.6% higher at $55.32, ending two consecutive weekly drops. The European crude benchmark settled at a premium of $8.75 to its US counterpart.

A weaker dollar helped drive oil up as the greenback extended a drop after the Federal Reserve lowered its interest rate estimate, albeit keeping a hike on the table for the current year. The euro jumped 1.5% against the dollar after German and Greek leaders struck a conciliatory note to keep Greece in the euro area.

The US dollar index for settlement in June slid 1.4% on Friday to 98.171, falling 2.5% for the week, its first weekly drop in five. The US currency gauge hit a 12-year high of 100.785 on March 13th. A weaker greenback makes dollar-denominated commodities cheaper for holders of foreign currencies and boost their appeal as an alternative investment.

Investors also eyed developments in nuclear negotiations between Iran and world powers, assessing the possibility for more than 1 million bpd of Iranian oil to flood the already oversupplied global market.

Week-long discussions in Switzerland on curbing the Islamic Republics nuclear program in exchange for lifting tough international sanctions ended without a deal on Friday, US Secretary of State John Kerry said, but “substantial progress” had been made. Both sides said on Saturday an agreement is possible, although technical hurdles persisted, with US President Barack Obama urging Tehran to offer more concessions, while Iran requested an immediate ending of sanctions should a deal be reached.

Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, said for Bloomberg: “The bigger deal is what’s going on with the dollar. There is going to be an Iranian deal no matter what. It’s a question of when rather than if.”

Lifting of sanctions against Iran, including a curb on the countrys crude oil exports, would allow it to almost immediately boost supplies. The Persian Gulf nation ships slightly over 1 million bpd of crude per day, compared to 2.5 million bpd prior to the imposition of sanctions.

Also providing some support, albeit to a limited extent, Baker Hughes Inc. reported that US oil producers idled another 41 oil rigs last week, a fifteenth straight decline that brought their total count to 825, the lowest in over four years. However, the drop was smaller than those in the previous two weeks and the average 59 for February, showing signs of slowing down.

Although oil explorers have idled 750 sites since early-December, US crude output reached a fresh peak last week as the biggest shale wells continue to operate. Some analysts expect the idling of rigs to effectively curb US production in the second half of the year.

The Energy Information Administration reported on Wednesday that crude stockpiles surged by 9.622 million barrels to 458.5 million last week, the highest in at least 80 years, sharply exceeding a projected gain of 3.75 million barrels. Supplies at the Cushing, Oklahoma storage hub jumped to 54.4 million barrels from 51.5 a week earlier, the most on weekly data spanning back to April 2004.

US crude production increased by 53 000 barrels per day to 9.419 million bpd, the highest on weekly records tracked since January 1983.

Meanwhile, OPEC pumped 30.6 million bpd in February, exceeding its 30-million-bpd production target for a ninth straight month, Bloomberg reported. The oil cartel will not hold an extraordinary policy meeting ahead of the scheduled one in June and will not cut production unless non-OPEC producers lead a supply cut, group officials said this week.

Pivot points

According to Binary Tribune’s daily analysis for Monday, WTI May futures’ central pivot point is at $46.27. In case the contract breaches the first resistance level at $47.73, it may rise to $48.88. Should the second key resistance be broken, the US benchmark may attempt to advance $50.34.

If the contract manages to breach the first key support at $45.12, it might come to test $43.66. With this second key support broken, movement to the downside could continue to $42.51.

Meanwhile, May Brent’s central pivot point is projected at $54.85. The contract will see its first resistance level at $56.14. If breached, it may rise and test $56.97. In case the second key resistance is broken, the European crude benchmark may attempt to advance $58.26.

If Brent manages to penetrate the first key support at $54.02, it could continue down to test $52.73. With the second support broken, downside movement may extend to $51.90 per barrel.