WTI bounces off one-week low and retakes $58.00 mark; lacks bullish conviction

West Texas Intermediate (WTI) US Crude Oil prices rebound from the $58.70 area, or a one-week low touched during the Asian session, and fill a major part of the bearish gap opening on Monday. The commodity currently trades around the $59.20 region, down only 0.15% for the day, amid mixed cues.

Lingering worries about a possible US military strike against Iran, which could disrupt oil supplies, turned out to be a key factor acting as a tailwind for the black liquid. In fact, the US Navy’s aircraft carrier USS Abraham Lincoln pivoted west after operating in the South China Sea and was expected to arrive in the Persian Gulf this week. This keeps geopolitical risks in play and lends support to Crude Oil prices.

The upside potential, however, seems limited amid expectations that the US control of Venezuela’s oil will likely increase global supplies. US President Donald Trump had said earlier this month that Venezuela would be turning over 30 million to 50 million barrels of high-quality, sanctioned oil to the US. Moreover, Trump reportedly is planning to control the Venezuelan oil industry for several years to come.

This might deter traders from placing aggressive bullish bets around Crude Oil prices amid relatively thin trading volumes on the back of a holiday in the US. Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent pullback from a nearly three-month top, levels just above the $62.00 mark touched last week, has run its course and positioning for further gains.