WTI recedes upside momentum beyond $41.00, EIA inventories in focus
- WTI fails to stretch post-API stockpile recovery beyond $41.82.
- Coronavirus woes join chatter surrounding Iran’s oil supply to confront traders cheering weak US dollar.
- EIA inventors, hopes of further stimulus and pandemic updates will be the key.
WTI prints mild gains of 0.16% while taking rounds to $41.16 before the European session begins on Wednesday. The black gold earlier cheered the broad US dollar weakness to ward off the downbeat inventory data from the American Petroleum Institute (API). However, fears of additional supply and the coronavirus (COVID-19) worries again drowned the energy commodity.
The US API Weekly Crude Oil Stock grew 7.544M against -8.322M for the period ended on July 17. The news managed to drag the energy benchmark to $41.45 but the buyers sneaked in as the US dollar weakness joined hopes of further stimulus from America. The US dollar index (DXY) seesaws around the lowest since March 10, flashed during the early-Asia, while flashing 95.13 as a quote by the press time.
US Treasury Secretary Steve Mnuchin said that the policymakers are progressing on the phase 4 stimulus and the deal is expected by the end of the July month. The news signaled an increase in the oil demand from the world’s largest economy, namely America. However, the surge in the pandemic data from the US, Australia and Tokyo, coupled with expectations of further worries, recalled the energy bears.
The selling got additional strength as RBC markets said Joe Biden’s win in the US elections, which has the numbers at present, could pave the way for increased Iranian oil supply. This could result in extra worries for the oil traders and trimmed the early-day gains.
Moving on, weekly official Crude Oil Stocks Change from the Energy Information Administration (EIA), expected -1.95 million barrels versus the previous of -7.493 million barrels, will be the key to watch. Should there be a clear disappointment from the inventory data, as is more likely, oil prices may revisit the $40.00 level.
Technical analysis
Having slipped below $41.47/35 resistance-turned-support, oil prices suggest revisiting to $41.00 and $40.00 round-figures. Though, any further weakness will not refrain from attacking the monthly bottom around $38.70. Alternatively, an upward sloping trend line from June 07, currently near $43.50, followed by February month low near $44.00, might challenge the black gold’s short-term upside.
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.
