- WTI extends gains and hits fresh 3-month highs above $41.
- Risk-on mood, easing of lockdown and tighter supplies support.
- Bulls could turn cautious on spike in virus cases globally, ahead of API.
Following a brief consolidative stint in the overnight trades. WTI (August futures on Nymex) caught a fresh bid wave and refreshed three-month highs, as it conquers the 41 threshold ahead of the American Petroleum Institute (API) Crude Stocks data due later on Tuesday.
At the press time, WTI gains 0.80% to trade at 41.05, reversing slightly from multi-day tops of 41.23. The renewed uptick in the black gold can be mainly attributed to a fresh risk-on wave witnessed in Asia, as the traders react to the potential additional stimulus plans likely to be rolled out by the US and Spain in the coming weeks.
Amid increased efforts to quicken the economic recovery by governments worldwide, the sentiment on the global stocks and US equity futures remain underpinned and help lift the appetite for other higher-yielding assets such as oil.
Meanwhile, broad-based US dollar sell-off amid improved market sentiment also offer an added boost to the USD-denominated commodity. Moreover, expectations of tighter global supplies, as the OPEC and its allies (OPEC+) try hard to adhere to the output cut deal to balance the oil markets, also render oil-supportive.
Despite the upbeat momentum, the bulls could turn cautious amid intensifying fears over the second-wave of coronavirus in the US and South Korea while China virus concerns ease down a bit. Also, the latest US weekly stockpiles due to be published by the API later today at 2130 GMT could keep the investors unnerved.
WTI technical levels to watch
WTI is trending higher within a potential rising wedge formation on the four-hour chart, suggesting that a correction is likely on the cards. Bulls faces immediate resistance at 41.50 (psychological levels). Meanwhile, the daily classic R2 at 40.48 should keep the buyers hopeful. A break below the last could open floors towards 39.66 (daily pivot point) and 39.47 (5-DMA).
WTI additional levels
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