WTI eases-off multi-year tops, near $ 71.50

• Oil sits at the highest levels in November 2014, awaits fresh impetus.
• Markets remain jittery as the US sanctions on Iran loom.

WTI (oil futures on NYMEX) built on yesterday’s rally and hit fresh four and a half year highs at $ 71.88 earlier today, before easing slightly to trade near the $ 71.50 levels.

The ongoing rally in oil prices is mainly driven by prospects of tightening supplies, as markets expect the US to re-impose sanctions on Iran, following the Iran nuclear deal fallout.

The barrel of WTI also found support from the higher prices projected by analysts, with Goldman Sachs citing that renewed sanctions and risks to supplies elsewhere, especially in Venezuela, implied there was a high possibility of higher prices.

Moreover, yesterday’s bullish EIA crude stockpiles data also collaborated to upside in the prices. The latest EIA data showed that the US crude inventories fell by 2.2 million barrels in the week to May 4, to 433.76 million barrels.

Looking ahead, markets await the US inflation report for fresh dollar trades, which could have a major impact on the USD-sensitive oil.

WTI Technical Levels

Mike Paulenoff, Author MPTrader.com offers his technical outlook on WTI: “From a longer-term perspective is bumping up against resistance in the vicinity of $71-$72. If there is no downside reversal from in and around current levels, amid a glaring non-confirmation of recent strength from $63 to $71.29, then we should consider that Oil is poised for a vertical assault-- an upside blow-off type of move-- that will conclude its Feb. 2016 recovery rally period. Such a scenario will point Oil towards a confrontation with its 10 year down trendline, which currently cuts across the price axis in the vicinity of $78.00. Only a break below $68.00 will begin to compromise the upside blow-off scenario.”