WTI challenges weekly tops near $40.50 ahead EIA data

WTI (August futures on Nymex) is trading at the highest level in five days near the midpoint of the 40 handle, currently, rallying over 3%.

Despite closing the second-quarter below the key 40 mark, the black gold has started out the third quarter on a solid footing, underpinned by the increased expectations of a faster economic rebound globally. Markets ignored the surge in the coronavirus cases amid better global economic recovery prospects.

The recent slew of Chinese macro data has been quite promising while the latest Eurozone and German Manufacturing PMIs also signaled that the recovery could be faster than expected. This gave a boost to the risk sentiment and higher-yielding assets such as oil. H

However, markets still remain nervous ahead of the critical US economic releases, including the ISM Manufacturing PMI and ADP Employment Change, which could have a major impact on the dollar trades. At the moment, the barrel of WTI continues to benefit from broad US dollar weakness as well.

Further, the bullish US weekly crude stocks change report published by the American Petroleum Institute (API) late Tuesday also collaborates with the upside in the commodity. The US crude supplies fell by 8.2 million barrels for the week ended June 26.

WTI technical levels to watch

With the bulls keeping the reins, the next resistances are aligned at 41 (round number) and 41.18 (classic R1). On the flip side, the immediate downside should be capped by the 40 level, below which 39.40/35 (daily pivot/ 5-DMA) could offer some respite to the bulls.

WTI additional levels