Brent Oil pares gains

FXStreet (Mumbai) - Front-month Brent futures have pared more than 50% gains ahead of the US session due to a stronger US dollar. Prices had hit a high of USD 59.501/barrel earlier today as speculators increased bets on higher prices amid a slowdown in US drilling.

Strong USD weighs

Part of the gains were erased, tracking the rise in the USD index above 100.00 levels. Disappointing Trade figures from China could have also weighed eventually over prices. Prices had gained earlier today as the declining US rig count in the US diverted the market attention to the imminent reduction of production. Reuters data shows open interest in WTI strike options for $60, $70, $80 and $90 per barrel on NYMEX has risen steadily since January, showing that many traders are betting on rising prices.

However, analysts said a big rally was also unlikely, although latest CFTC data showed the biggest weekly rise in the long positions since 2011.

Brent Crude Technical Levels

The futures currently trade at USD 58.50/barrel. The immediate support is located at 57.85 (50-DMA), under which losses could be extended to 57.42 (5-DMA). On the flip side, resistance is seen at 58.67, above which gains could be extended to 59.50.