WTI eclipses $48.00 for the first time since March amid risk on market vibe

• Crude oil markets have been focused on broader risk appetite on Thursday and have thus rallied given risk on.
• WTI eclipsed the $48.00 level for the first time since early March and eyes a move towards $50.

Front-month WTI crude oil futures have been primarily focused on broader risk appetite as opposed to crude oil market supply-side fundamentals on Thursday and have thus rallied in tandem with gains in other risk assets such as US equities (S&P 500 +0.5%) and as the dollar has fallen (DXY -0.7%). WTI rallied above the $48.00 level for the first time since early March and is currently trading in the $48.30s, just below highs at $48.58.

WTI takes its cue from broader risk appetite

A few macro factors have driven the risk on market tone that has supported crude oil markets on Thursday; 1) Fed Chair Powell’s dovish tone in the post-meeting press conference in which he emphasised that the Fed’s ultra-accommodative stance is going nowhere anytime soon and that the Fed has the flexibility to ease further if needed, 2) a continued pumping of hopes that deals can be reached on further US Covid-19 aid and a Brexit deal and 3) recently released soft US labour market and manufacturing survey numbers which have triggered increased bets for more Fed stimulus in January. Moreover, add in a healthy dose of vaccine optimism that continues to permeate the market.

WTI eyeing a move to $50

WTI is eying further gains, with the first significant area of resistance being the early February low at $49.50. Just above that, there is the psychologically important $50 level and above that the key support zone for most of 2019 in between $50.50-$51.00.

WTI weekly chart