WTI rebounds to test $38 despite dour IEA oil demand outlook
|- WTI bounces amid risk-on mood, weaker US dollar.
- Bulls ignore the OPEC and IEA gloomy oil demand forecasts.
- US API crude inventories eyed ahead of Thursday’s OPEC+ meeting.
Fresh bids emerged just above the 37 mark, allowing a bounce in WTI (futures on Nymex) back above 37.50.
At the press time, the US oil rises 1.66% to 37.89, having dived out of the consolidative range seen since the US last session.
The commodity is on track to conquer the 38 barrier, helped by the upbeat market mood on fresh optimism over the Chinese economic recovery. Oil bulls, especially, cheer the improvement in Chinese industrial sector activity, as the dragon nation is the world’s no.2 oil consumer.
Further, the risk-on market profile weighs down on the safe-haven US dollar, collaborating with the upside in the black gold. A weaker greenback makes the dollar-denominated oil cheaper for foreign buyers.
The strength in the WTI barrel can be also attributed to the latest alert issued by the National Hurricane Center (NHC), citing that hurricane Paulette has maintained its strength as it accelerates northeastward.
Meanwhile, the bulls stand resilient to the latest downward revisions to the 2020 oil demand forecasts announced by the OPEC and the International Energy Agency (IEA), in their respective monthly reports.
IEA cuts 2020 oil demand forecast, warning of a ‘treacherous’ path ahead with rising coronavirus cases. The agency cut its outlook for worldwide oil demand growth to 91.7 million barrels per day (bpd).
On Monday, the OPEC noted that the world oil demand in 2020 is expected to fall by 9.46 million bpd. The forecasts were lowered due to a higher non-OPEC supply view and lower global demand.
Markets now look forward to the weekly crude supplies report due to be published by the American Petroleum Institute (API) later in the NA session. The key event risk for oil remains the critical OPEC and its allies (OPEC+) meeting due on Thursday.
WTI technical levels to watch
“The upper end of the pennant pattern is currently seen at $37.37. A breakout above that level would mean the sell-off from the August high of $43.78 has ended, and the bulls have regained control. Alternatively, a move below the lower end of the pennant, currently at $36.92, would imply a continuation of the sell-off from August's high and expose deeper support levels lined up at $34.36 (June 15 low),” FXStreet’s Analyst Omkar Godbole explained.
WTI additional levels
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