Crude oil futures weekly recap: March 23 – March 27

West Texas Intermediate and Brent crude tumbled on Friday, paring hefty overnight gains, as investors downplayed Mideast supply disruption concerns while also fearing a possible nuclear deal between Iran and major powers.

US crude for delivery in May fell 5% on Friday to $48.87, paring its weekly advance to 4.9%. Prices held in a weekly range between Thursdays three-week high of $52.48 and Mondays low at $45.33.

On the ICE, Brent for settlement in the same month slid 4.7% on Friday to $56.41, closing the week 2% higher. Prices ranged between $59.78 and $54.12 for the week. Brent settled at a premium of $7.54 to its US counterpart, down from $7.76 on Thursday.

Oil gave back recent hefty gains as market players no longer saw an immediate threat to Mideast crude supplies through the Bab el-Mandeb Strait as Saudi-led air strikes targeted positions of Iranian-backed militants who advanced through the country.

Moreover, investors focused on developments in negotiations between Iran and world powers as they neared an end-March deadline for a preliminary deal. The talks, however, saw difficulties as Iran refused to compromise on key issues around the scope of advanced nuclear research that the Islamic Republic could continue to do under the deal, as well as the pace of sanctions lifting.

Iranian Foreign Minister Javad Zarif downplayed tensions, saying that some progress was made, but added that the issue of sanctions remained a hurdle.

“We are moving forward” Zarif said. “I think we can in fact make the necessary progress to be able to resolve all of the issues and start writing them down in a text that will become the final agreement.”

Tariq Zahir, fund manager at Tyche Capital Advisors, said for CNBC: “The bulls caved after sensing an Iranian nuclear deal might happen by the weekend. Nobody wants to go home long oil on a Friday, with news like this.”

Also weighing on the market was the smallest drop in the number of active US rigs targeting oil in 15 weeks. Baker Hughes Inc. said on Friday that US oil explorers idled 12 oil rigs, showing possible signs the count may have bottomed. Active rigs have dropped by 49% since October and are currently standing at 813.

However, US crude production still inched up to the highest in more than three decades in the seven days through March 20th, revisiting the peak for a yet another week.

Data by the Energy Information Administration showed on Wednesday that US crude oil inventories rose by 8.170 million barrels to 466.7 million, the highest in at least 80 years. Stockpiles at the Cushing, Oklahoma storage hub jumped to 56.3 million barrels from 54.4 million a week earlier, the most on weekly data spanning back to April 2004.

US crude oil production inched up by 3 000 barrels per day to 9.422 million bpd, the highest on weekly records started in January 1983.

A report earlier in the week showed that leading OPEC producer Saudi Arabia was pumping about 10 million barrels per day of crude, near an all-time record. The Organization of the Petroleum Exporting Countries pumped 30.6 million barrels in February, exceeding its targeted production pace for a ninth straight month.

However, oil prices still managed register solid weekly gains, bolstered by a weaker dollar. The dollar has been easing after the Federal Reserve revised down its estimate for interest rates this year, while investors pushed back expectations for an interest rate hike from June to September.

The US dollar index for settlement in June slid 0.17% on Friday to 97.520, closing the week 0.7% lower. The US currency gauge fell 2.5% the prior week. A weaker greenback makes dollar-denominated commodities cheaper for holders of foreign currencies and boosts their appeal as an alternative investment.

Pivot points

According to Binary Tribune’s daily analysis for Monday, WTI May futures’ central pivot point is at $49.49. In case the contract breaches the first resistance level at $50.76, it may rise to $52.66. Should the second key resistance be broken, the US benchmark may attempt to advance $53.93.

If the contract manages to breach the first key support at $47.59, it might come to test $46.32. With this second key support broken, movement to the downside could continue to $44.42.

Meanwhile, May Brent’s central pivot point is projected at $57.13. The contract will see its first resistance level at $58.32. If breached, it may rise and test $60.22. In case the second key resistance is broken, the European crude benchmark may attempt to advance $61.41.

If Brent manages to penetrate the first key support at $55.23, it could continue down to test $54.04. With the second support broken, downside movement may extend to $52.14 per barrel.