WTI: Upside momentum fades around $37.00 despite API inventory draw
- WTI eases from a three-month high of $37.17 at the end of the four-day winning streak.
- API Weekly Crude Oil Stocks slipped from 8.731 million barrels to -0.483 million barrels.
- Weak US dollar, optimism surrounding economic re-open and hopes extended output cut by the OPEC+ favor bulls.
- EIA data in the spotlight, qualitative catalysts, US economics are important too.
WTI drops to $36.99 at the end of Tuesday’s trading on NYMEX. In doing so, the energy benchmark paid a little heed to the price-positive weekly inventory data from the American Petroleum Institute (API). However, broad risk-on sentiment, coupled with the US dollar weakness and expected further production cuts from the OPEC+, enabled the bulls to refresh three-month high above $37.00.
As per the latest API weekly stockpile for the period ended on May 29, oil inventories dropped -0.483 million barrels versus the previous addition of 8.731 million barrels.
While the data becomes price positive, the barrel of black gold stepped back from a 12-week high of $37.17 to $36.99 by the end of the American session on Tuesday. The reason could be traced from the market’s fear of filling a big gap between the high of March 11 and low of March 06, $36.64 and $41.22 respectively.
Even so, the energy benchmark managed to post a four-day winning streak by the end of the settlement. The reasons to spot could be increasing economic restart in most Europe as well as the US dollar weakness amid riots at home. Also supporting the oil prices could be the early positive signals concerning the meeting of Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia, mostly known as OPEC+, on June 04.
Looking forward, traders will keep eyes on the geopolitical and trade headlines for fresh impulse ahead of the official weekly inventory report from the Energy Information Administration (EIA). Forecasts suggest official stockpiles grew 3.3 million barrels versus the previous rise to 7.928 million barrels during the week ended on May 29.
Additionally, the US economic calendar carrying the ISM Non-Manufacturing PMI, ADP Employment Change and Factory Orders will also be important to watch.
Technical analysis
A daily closing beyond March 11 top of $36.64 enables the black gold to fill the gap below March 06 bottom of $41.22. Though, overbought RSI conditions might trigger a pullback to $34.90.
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.
