- WTI challenges higher near the $42 mark.
- Vaccine optimism seems to play out around the oil market.
- USD weakness benefits oil ahead of EIA crude stocks data.
WTI (futures on NYMEX) is extending its Asian bounce in the European session, backed by a recovery in the risk sentiment and broad-based US dollar weakness.
The market mood remains somewhat buoyed by the expectations of a quicker global economic recovery once the covid vaccines roll out and life returns to normalcy in 2021. This narrative also implies a revival in the demand for oil and its products.
The safe-haven US dollar extends losses across its main peers amid a recovery in the European equities and S&P 500 futures, adding to the upside in the dollar-denominated oil.
Despite the vaccine optimism, the bulls remain cautious amid fresh restrictions and localized lockdowns announced in Australia and the US, as the world grapples with the second wave of the virus.
Also, it remains to be seen if the black gold can sustain the bounce, as a bigger-than-expected build in the US weekly crude stockpiles could remain a drag.
“The American Petroleum Institute (API) said on Tuesday that U.S. crude stockpiles rose by 4.2 million barrels last week, well above analysts’ expectations in a Reuters poll for a build of 1.7 million barrels,” per Reuters.
More so, the OPEC and its allies (OPEC+) concluded its meeting with a delay in the oil output hike by three months against expectations of an extension by six months. The outcome of the meeting could also limit the upside attempts in the WTI barrel.
Attention now turns towards the Energy Information Administration (EIA) weekly crude stocks change data due to be published later in the NA session for fresh impetus. Also, of note remains the covid developments and their impact on the broader market sentiment.
WTI technical levels
“The focus now is on Wednesday's close. Acceptance above the Doji candle's high of $41.69 would imply the period of indecision has ended with a bull victory and open the doors to $43.06 (Nov. 11 high). A violation there would expose the 2020 high of $43.78. Alternatively, a close under the Doji candle's low of $40.57 would confirm a bearish reversal and shift risk in favor of a drop to the 200-day simple moving average (SMA) located at $36.28,” FXStreet’s Analyst Omkar Godbole noted.
WTI additional levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats to 1.0750 area as USD recovers
EUR/USD stays under modest bearish pressure and trades slightly below 1.0750 in the European session on Wednesday. Hawkish comments from Fed officials help the US Dollar stay resilient and don't allow the pair to stage a rebound.
GBP/USD drops below 1.2500 ahead of Thursday's BoE event
GBP/USD stays on the back foot and trades in negative territory below 1.2500 after losing nearly 0.5% on Tuesday. The renewed US Dollar strength on hawkish Fed comments weighs on the pair as market focus shifts to the BoE's policy announcements on Thursday.
Gold stays near $2,310 as US yields edge higher
Following a quiet Asian session, Gold retreated slightly to the $2,310 area. Hawkish tone of Fed policymakers help the US Treasury bond yields edge higher and make it difficult for XAU/USD to gather bullish momentum.
SEC vs. Ripple lawsuit sees redacted filing go public, XRP dips to $0.51
Ripple (XRP) dipped to $0.51 low on Wednesday, erasing its gains from earlier this week. The Securities and Exchange Commission (SEC) filing is now public, in its redacted version.
Softer growth, cooler inflation and rate cuts remain on the horizon
Economic growth in the US appears to be in solid shape. Although real GDP growth came in well below consensus expectations, the headline miss was mostly the result of larger-than-anticipated drags from trade and inventories.