WTI consolidates recent gains near 25-week high above $43.50
- WTI bulls catch a breather after rising to $43.86, the highest levels since early-March.
- Higher than expected EIA stockpile draw, fears of hurricane Laura keeps the bulls hopeful.
- Cautious sentiment ahead of the key US events probes further upside.
Following its run-up to the highest since March 06, WTI trades near $43.55 as markets in Asia brace for the key Thursday. The energy benchmark refreshed the multi-week high the previous day after weekly inventories from the Energy Information Administration (EIA) marked an extra drop than -3.694M forecast. Also backing the black gold is the hurricane Laura that is anticipated to have a speed of 150 miles per hour.
The EIA’s oil inventory numbers for the week ended on August 21 dropped to -4.689 million barrels versus -3.694 million barrels of market consensus and -1.632 million barrels of prior. The official stockpiles follow the suit of the private reading flashed earlier by the American Petroleum Institute (API), -4.524M versus -4.264M prior.
After marking Laura as the category 3 hurricane, the US National Hurricane Center (NHC) said that the speed could hit 150 miles per hour. The NHC update also said, “Wind and water levels increasing as extremely dangerous hurricane laura aims at the northwest gulf coast. Catastrophic storm surge, extreme winds, and flash flooding expected along the northwest gulf coast tonight.” It’s worth mentioning that the oil producers of the Persian Gulf has already shut down major refineries and hence offered a choke to the supply. On the other hand, weaker US dollar and hope of the further stimulus favor the demand.
Even so, the market’s wait for Federal Reserve Chairman Jerome Powell’s speech in the Jackson Hole Symposium probes the oil bulls. Also up in the line will be America’s preliminary readings of the second quarter (Q2) GDP, expected -32.5% versus -32.9%.
Additionally, chatters surrounding the fresh Sino-US tussle, this time over the South China Sea, as well as the coronavirus (COVID-19) updates are also challenging the energy prices.
Technical analysis
While February month’s low near $44.00 becomes the immediate concern of buyers, the sellers may enter if the prices fail to stay past-$43.00.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
