WTI recovery stalled above the $54.00 mark ahead of EIA, FOMC

• The barrel of WTI trades on the defensive below $54.00.
• FOMC meeting will be the main event later in the day.
• API reported 800K barrels draw yesterday. EIA report next on tap.

Prices of the barrel of the West Texas Intermediate have lost some upside momentum above weekly highs in the $54.30 area, coincident with a Fibo retracement of the December-April rally.

WTI weaker, looks to EIA

Prices of WTI charted a bullish ‘outside day’ on Tuesday after concerns on the US-China trade front have mitigated somewhat on the potential Trump-Xi meeting at the G-20 event next week.

In the meantime, tensions between US and Iran persist after the recent attack to two oil tankers in the Gulf of Oman remains unresolved. The news has collaborated with the already mounting geopolitical concerns in the region and remains a positive driver for higher prices, although trade tensions and the impact on the global demand for oil stay as almost the exclusive catalyst for price direction for the time being.

In the calendar, the API reported a lower-than-expected draw of US crude oil supplies late on Tuesday, while the official weekly report by the DoE is due later in the day.

Moving forward, the FOMC meeting should keep the buck under scrutiny amidst rising speculations of a Fed’s rate cut in the short term.

What to look for around WTI

Crude oil appears to have shifted its focus of attention to the macro context, where the protracted US-China trade dispute and its negative consequences on global growth and demand for oil keep weighing on traders’ sentiment. Geopolitical jitters, particularly after the recent attacks in the Gulf of Oman, have triggered just a short-lived relief-rally, while there still no evidence of any culprits. This view has relegated – albeit temporarily – positive drivers coming in from the supply side, including the tight US market, the OPEC+ agreement (and potential extension) to curb oil production and the so-called ‘Saudi put’.

WTI significant levels

At the moment the barrel of WTI is retreating 1.28% at $53.33 and faces immediate contention at $50.54 (monthly low Jun.5) seconded by $47.39 (78.6% Fibo of the December-April rally) and finally $44.23 (2019 low Jan.2). On the upside, a breakout of $54.76 (high Jun.10) would aim for $58.45 (100-day SMA) and finally $58.90 (200-day SMA).