WTI returns to the red below $38 ahead of EIA data

WTI’s (futures on Nymex) recovery momentum from three-month lows faltered once again above the $38 mark, as the sellers returned in the European session this Thursday.

At the press time, the US oil drops 1.05% to $37.64 and remains on track to book the first monthly loss in five. The corrective bounce lost steam in the US last session after the US Energy Information Administration (EIA) downgraded its oil demand outlook.

Further, the bearish weekly US crude stocks change report published by the American Petroleum Institute (API) late Wednesday also dented the sentiment around the black gold. The API data showed an unexpected build in the US crude stockpiles to the tune of 3 million barrels in the week to September 4.

In further evidence of bearish sentiment on oil, “leading commodity traders are booking tankers to store crude oil and diesel on the water, with supply outpacing consumption,” Reuters reported, citing trading sources and shipping data.

Meanwhile, WTI bulls ignored the report that the OPEC and its allies (OPEC+) compliance to oil output cuts rose to 103% last month. Also, the news that China is looking to bump up its strategic commodities reserves over the next five years failed to offer any support to the prices.

Markets now await the US EIA crude stocks data and the sentiment on Wall Street to gauge near-term trading opportunities in the commodity.

WTI technical levels to watch

“The daily chart studies remain biased in favor of the bears. For instance, the 5- and 10-day simple moving averages continue to trend south, while the 14-day RSI hovers in bearish territory below 50. As such, a re-test of $37.00 looks likely. A close above the descending 10-day SMA, currently at $40.66, is needed to invalidate the bearish outlook,” FXStreet’s Analyst Omkar Godbole explained.

WTI additional levels