WTI drops towards $61.00 on API inventory build, US dollar recovery ahead of EIA data

• WTI extends pullback from multi-month top after downbeat private inventory survey.
• API Weekly Crude Oil Stock grew beyond -5.8M for the week ended on February 19.
• US dollar weakness battles reflection fears and a lack of major data/events to tame the oil sellers.

WTI drops from $61.89 to $61.06, currently around $61.20, at the end of Tuesday’s settlement, early Wednesday morning in Asia. The oil benchmark recently responded to the industry stockpile report unveiled by the American Petroleum Institute (API). However, the greenback bears join cautious optimism towards the global recovery and an absence of normal supply flow to back the oil bulls.

As per the latest weekly inventory report, API stockpiles jumped +1.026 million barrels versus the previous draw of 5.8 million barrels during the period ended on February 19.

Although the commodity prices dropped following the bearish stockpile data, bulls aren’t gone home as the US-Iran tussle joins sustained abnormal oil supplies from the Persian Gulf.

Iran’s Supreme Leader Ayatollah Ali Khamenei said, per New York Post, during the week that Tehran would not succumb to pressure from the United States on any matter. Washington and Tehran recently discuss the detention of Americans by the Gulf country as well as the nuclear deal amid the new government on Capitol Hill.

Elsewhere, production from Texas is yet to recover the losses marked during the latest freeze. The same join on-going output cuts from Saudi Arabia, Libya and Russia to help the energy buyers.

It’s worth mentioning that the US dollar’s weakness, currently near the early January levels, also helps the oil benchmark as well as the hopes of the economic recovery amid unlock announcements from key players. Furthermore, Fed Chair Jerome Powell’s semi-annual testimony favored expectations of further economic strength while also turned down the reflation fears suggesting the Fed’s readiness to do whatever necessary.

Looking forward, oil traders await details from Energy Information Administration (EIA) for fresh impulse. The official inventory report, up for publishing around 15:30 GMT, is likely to mark a reduction in the stockpile draw from -7.258 million barrels to -5.372 million barrels during the week ended on February 19. Also likely to direction oil traders will be the second season of the Fed’s Chair Powell.

Technical analysis

Failures to stay strong beyond $62.00 tease counter-trend traders to eye the monthly support line near $59.70. However, the $60.00 can also raise bars for the WTI sellers. Meanwhile, the $63.00 and previous yearly high surrounding $65.45 can challenge the oil buyers above $62.00.