WTI pulls back slightly from recent $83.00 highs, remains well support as dollar remains weak

• Oil has ebbed back from earlier session highs near-$83.00 to the mid-$82.00s.
• There haven't been many fresh catalysts for oil markets, which remain supported by the week dollar.

Oil has been slowly coming off the boil over the course of Thursday’s session, with front-month WTI futures having ebbed back to test the $82.00 area in recent trade after failing to test Wednesday’s highs at $83.00 in earlier trade. At current levels, WTI is trading lower by slightly more than 25 cents on the day, but continues to trade higher by more than $3.0 (over 4.0%) on the week and is only about $3.0 below the 2021 highs in just above $85.00. WTI has come a long way in a very short time (+$7.0 already in 2022) and some bulls may be growing worried that it might be overdue some profit-taking. WTI’s 14-day Relative Strength Index (RSI) is yet to reach overbought territory, though is very close. That suggests that the rally may have the legs to test 2021 highs but, by that point, things would be becoming overbought and a correction may be in order.  

There hasn’t been much by way of fundamental catalysts to drive the price action thus far this Thursday, with analysts citing generally positive sentiment amid receding concerns about Omicron as keeping prices close to recent highs. Some suggested recent cold weather in North America, which supported a bullish breakout in US gas prices on Wednesday (much of which has been given back on Thursday) as supporting crude oil markets. PVM analysts state that “it will be interesting to see if the optimism is maintained when temperatures start rising come spring.”

Geopolitics is worth monitoring, as NATO/Russia rhetoric heats up amid failure to reach an agreement over the Ukraine crisis, just in case it starts leading to some risk-premia being priced into oil (supportive if anything). Otherwise, crude oil will likely trade as a function of its correlations to other asset classes. The dollar remains weak, which should help keep oil close to recent highs for the time being (as a weaker dollar makes US oil more affordable for international investors). Meanwhile, US equities are mixed (Nasdaq 100 down half a percent versus Dow up half a percent and S&P 500 flat), so likely not having much impact on oil either way at this point.