WTI moved back above its 50-day moving average Friday and is fighting to hold above $60 this morning. 

A market that spent weeks obsessing over punishing oversupply is now being forced to respect a technical line that encourages short covering rather than fresh selling.

As Bloomberg macro strategist, Michael Ball writes, a return to a war premium is warranted as a genuine peace deal between the Ukraine and Russia remains elusive. Ukrainian negotiators are headed into another round of talks in Florida, while Russia is already objecting to parts of the US-backed plan and waiting on a fresh readout from the discussions.

Traders are watching the process for any sign of a settlement that could eventually ease sanctions and boost Russian supply as covered by colleagues Grant Smith, Alex Longley and Will Kubzansky. However, with Ukraine still striking targets like the Syzran refinery and Temryuk port and Washington lobbying Europe to tighten the screws on Moscow’s frozen assets, a deal looks far away.

At the same time, the technical picture has turned more supportive.

WTI has pushed back through its 50-day moving average, a key line that many treat as short-term support.

Meantime, low implied volatility and firmer prompt spreads signal a better balanced or slightly tighter near-term market, rather than one braced for a sudden collapse.

The longer-term anchor on oil remains that surplus story. Saudi Aramco has cut its flagship Arab Light official selling price to Asia to the lowest level since the early-2020s, admitting that refiners have plenty of choice and need an incentive to take Saudi barrels over others.

Sell-side research still leans negative on oil, with banks like Macquarie flagging oil multi-million-barrel-a-day surplus and sketching Brent-in-the-$50s scenarios as storage builds and refining margins compress.

That kind of fundamentally bearish backdrop implies positioning is still skewed short among macro funds and CTAs.

That’s why the pain trade now points higher - if WTI can hold above its 50-day moving average and the $60 level in a low-vol, firmer-spread backdrop, the current bounce may force further short covering barring fresh catalysts.