Oil firm above $54.00 handle amid output cut hopes

WTI crude oil erased early losses and turned into positive territory for the third consecutive session to move back above $54.00/barrel mark.  

Currently trading around $54.10 region, optimism surrounding the landmark agreement between major oil producers to cut oil output continues to support prices as investors gear up for data on US drilling activity, the Baker Hughes rig count data, later during NY session. Moreover, news headlines (via Bloomberg) that Kuwait is set for a bigger production cut that required in the deal also collaborated to the commodity's up-move on Friday.

However, resurgent greenback demand, with the key US Dollar Index staging a goodish recovery from 3-week lows, was seen restricting further upside. Traders on Friday will look forward to the release of monthly jobs report from the US, which will set the tone for greenback and eventually provide some impetus for dollar-denominated commodities, including oil.

Technical levels to watch

Immediate upside resistance is seen near $54.35-40 region (Dec. 28 high) above which the commodity is likely to surpass $54.50 resistance and head towards retesting $55.00 psychological mark. On the downside, Weakness below $54.00 handle might now find support near $53.75 level below which the commodity is likely to drop back towards session low near $53.50-45 support area, en-route $53.15-10 support.