WTI spikes to 17-month peak but retreats back below $55.00

WTI crude oil gained fresh traction on the first trading session of 2017 and jumped to the highest level since July 2015. 

The black gold touched a session peak level of $55.24 before retracing from high and is currently trading marginally below to currently trading marginally below $55.00/barrel mark. Optimism surrounding the landmark oil output cut agreement between OPEC and several non-OPEC producers underpinned the demand and has been the key factor driving prices higher on Tuesday. OPEC and non-OPEC member countries agreed on a deal in November to reduce combined output by nearly 1.8 mbpd, marking around 2% of global supply in an attempt to lift prices. 

The commodity, however, quickly retreated from session peak as some market participants remain skeptic over implementation and adherence to the agreed quota amid resurgent US Dollar strength, which tends to dent demand for dollar-denominated commodities, including oil. 

Later during the week, market players will keep a close watch on the weekly US stockpiles data, API and official EIA report, which would gauge demand in the world's largest oil consumer and eventually provide fresh impetus for oil prices. 

Technical levels to watch

Momentum above $55.00 mark is likely confront some resistance near $55.40-45 region above which the commodity seems all set to aim towards reclaiming $56.00 handle. On the downside, $54.55-50 region now seems to protect immediate downside, which if broken might drag the commodity back towards $54.00 handle, towards testing its next support near $53.70-60 region.