Oil flat-lined around $53.15-20, downside remains supported

WTI crude oil traded higher on Tuesday and was seen attempting to build on to its move back above $53.00/barrel mark.

Currently trading around $53.20-15 band, optimism surrounding oil output cut agreement between OPEC and non-OPEC members, in an effort to reduce global supply glut, has been the key factor underpinning the black gold. Last month OPEC cartel agreed to cut output by 1.2 million barrels per day, while non-OPEC producers will cut production by 558,000 barrels. 

Meanwhile, resurgent greenback buying interest was seen restricting further upside amid thin liquidity in the market. A stronger greenback tends to weigh on commodities priced in the US Dollar, including oil. 

Moreover, investors also preferred to wait and see if the agreement actually materialize, and contribute towards rebalancing the oil market, before adding on to their bullish bets. The agreement between OPEC and non-OPEC producers will come in force from January 2017.

With many market participants away for year-end holidays, trading activity is likely to remain subdued ahead of the US weekly inventories report from the API and EIA.

Technical levels to watch

On the upside, $53.50-55 region seems to act as immediate resistance above which the commodity seems all set to surpass $54.00 round figure mark and head towards testing 17-month high resistance near $54.50 region touched on Dec. 12.

Meanwhile on the downside, weakness below $53.00 handle is likely to drag the commodity back towards $52.50 intermediate support, en-route $52.10-52.00 strong horizontal support.