WTI: Bulls take a breather around $37.50 ahead of EIA

WTI (July futures on Nymex) is off the three-month highs in the European session, consolidating the upside around 37.50 levels, having failed to sustain the rally above the 38 mark.

The bulls appear to face exhaustion amid the third day of gains while they await the latest US weekly crude stocks data, due to be published by the US Energy Information Administration (EIA) later today at 1430 GMT, for fresh trading impetus.

The black gold’s upside is mainly fuelled by the unexpected draw in the API crude supplies, hopes of OPEC+ output cuts extension and narrative on the global economic recovery, Further, signs of demand revival in the world’s top oil consumer, China, also collaborates with the bullish sentiment around oil.

Jim Burkhard, Vice President and Head of oil markets at IHS Markit, said on Wednesday, “ “The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy.” 

Additionally, with Brent oil regaining the critical 40 barrier, the oil market sentiment received a further boost. Meanwhile, broad US dollar weakness, amid a risk-on rally in the stocks, makes the USD-sensitive oil cheaper for foreign buyers.

Oil traders now await the OPEC+ output cut decision due later this week for the next direction in the prices.

WTI technical levels to watch

“Oil prices are rising towards filling the gap between March 06 low of $41.22 and March 11 top of $36.64. However, overbought RSI conditions raise doubts on the quote’s further upside and hence any pullback below $36.40, comprising 100-day SMA, could drag it to a short-term rising support line, at $35.00 now. In a case where the WTI drops below $35.00, April month high of $32.20 could lure the sellers,” as explained by FXStreet’s Analyst Anil Panchal.

WTI additional levels