WTI drops back below $53 mark ahead of EIA data

WTI (futures on NYMEX) falls back below the $53 mark in the European session, reversing the Asian bounce, as the markets turn cautious ahead of the Energy Information Administration (EIA) weekly crude stocks data.

Sellers returned after a brief recovery stint, as the sentiment remains undermined by an unexpected build in the US crude stocks data, as published by the American Petroleum Institute (API) late Wednesday.

US crude oil inventories rose 2.6 million barrels in the week to Jan. 15. Vs. expectations of a 1.2 million barrels fall. The surprise rise in the stockpiles re-ignited coronavirus pandemic-led oil demand recovery concerns.

Meanwhile, a sense of caution seems to have set in across the markets in the lead up to the European Central Bank (ECB) monetary policy decision, which is weighing on the demand for higher-yielding assets such as oil.

However, the further downside appears cushioned amid a broadly weaker US dollar, as US President Joe Biden’s stimulus boost has dulled the dollar’s attractiveness as a safe-haven. A weaker greenback makes the USD denominated oil cheaper for foreign buyers.

Markets await the US weekly jobless claims data for fresh dollar trades, which will have an impact on the USD-sensitive black gold. Meanwhile, the EIA crude stocks change data will have a significant bearing on the oil market, especially after the downbeat API data.

WTI technical levels

“The rejection at the channel hurdle is backed by lower highs (bearish pattern) on the 4-hour chart Relative Strength Index. As such, a deeper drop could be seen while heading into the weekend. Support is located at $51.81 (Jan. 17 low), followed by $51.00 (multi-month ascending trendline support),” FXStreet’s Analyst Omkar Godbole noted.

WTI additional level