WTI breaks higher to test $ 57 mark amid fresh trade deal hopes
|- Oil jumps as risk-on returns on revival of trade deal hopes.
- Bullish API Crude Stocks data also underpin the prices.
- Markets keep an eye on US-China trade updates, EIA Crude Stocks data.
WTI (oil futures on NYMEX) caught a fresh bid wave last minutes and broke the Asian consolidative mode in Europe, as the bulls look to regain the 57 handle amid improved market mood.
The risk sentiment witnessed a major turnaround on the latest Bloomberg report that triggered a fresh risk-on wave across the financial markets in Europe. Bloomberg cited people familiar with the trade talks, as saying that the US and China are moving closer to a trade deal despite the escalating tensions over the Hong Kong and Xinjiang bills.
The buying interest around the black gold gathered steam alongside other risk assets such as the equities, Treasury yields and Wall Street futures. At the time of writing, WTI is up +1.20% near 56.80 region, having jumped to three-day tops of 56.91 on the trade headlines.
The barrel of WTI also continues to derive support from a drop in the US crude stockpiles, as reported by the American Petroleum Institute (API) late Tuesday. The API data showed that the US crude inventories fell by 3.7 million barrels, more than double expectations of a decline of 1.7 million barrels.
Further, increased expectations that the OPEC and its allies (OPEC+) will extend the output cut policy well into the next year also collaborate to the upbeat tone around the commodity. OPEC+ is likely to meet on Thursday in Vienna to discuss the supply policy.
Further, the same belief is endorsed by the US banking giant Goldman Sachs, as it says that “we believe the global oil supply-demand balance requires an extension of the current OPEC+ cuts.” The hopes of further supply cuts help keeps the downside cushioned in the barrel of WTI.
Looking ahead, the incoming US-China trade headlines will continue to affect the risk flows and in turn impacting oil prices. Also, the US macro news could likely have a bearing on the USD-sensitive oil.
WTI Levels to watch
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