WTI hits fresh two-week highs near $42.50 ahead of EIA data

WTI (futures on Nymex) extends its winning-streak into the third straight day on Wednesday, as the bulls challenge the July high of $42.51.

The US oil caught a fresh bid-wave in Europe and jumped nearly 80 cents to hit a new two-week high of $42.41, where it now wavers. The black gold found solid support at $41.50 levels during the Asian session.

The main catalyst behind the latest rally in the barrel of WTI is the significant improvement in the risk sentiment, as expectations of a US fiscal stimulus agreement boost the European equities and US stock futures. White House appeared closer to an agreement on a new stimulus to help the coronavirus-hit economy.

Meanwhile, looming economic concerns due to the virus impact weigh heavily on the US Treasury yields and the dollar, further benefiting the USD-sensitive oil. A weaker greenback makes the dollar-denominated WTI cheaper for foreign buyers.

Also, a bigger-than-expected draw in the US weekly crude inventories, as reported by the American Petroleum Institute (API) late Tuesday, added to the upside in the commodity. The API data showed that the US crude stockpiles fell 8.6 million barrels in the week to Aug. 1 to 520 million barrels vs. expectations for a drop of 3 million barrels.

Traders now look forward to the official crude stocks data from the US Energy Information Administration (EIA), which will be released later on Wednesday at 1430 GMT. Additionally, the US macro data and stimulus negotiations will also garner attention for fresh cues on the global market sentiment.

WTI technical levels to watch

“If at all the oil prices drop past-$39.60, July 10 low near $38.70 will be the key to the quote’s further downside targeting June 25 trough surrounding $37.20/15. Meanwhile, upside break beyond $41.10 enables the bulls to retake control while targeting highs marked during July and June months, respectively around $42.50 and $42.65,” explains Anil Panchal, FXStreet’s Analyst.

WTI additional levels