WTI: Bulls take a breather on $34 after the 3% rally

• WTI consolidates near two-month highs above $34 mark  
• Demand hopes, OPEC+ cuts and falling US supplies support.
• US dollar strength amid risk-off to keep the gains in check?

Having hit the highest level in two months at 34.48, WTI (July futures on Nymex) has entered a phase of bullish consolidation, as the buyers gather pace for the next push higher.

The stall in the black gold’s upside could be likely associated with the rebound in the US dollar across the board amid risk-off market profile, fueled by coronavirus-led global economic worries and escalating US-China tensions. A stronger greenback makes the USD-denominated oil less attractive to foreign buyers.

However, the upside bias in the US oil still remains intact amid increased expectations of demand revival, as global economies re-open from the virus-imposed lockdowns.

Further, the compliance to the OPEC+ output cut deal by the oil producers combined with tumbling US crude inventories offer support to the barrel of WTI.

The Energy Information Administration (EIA) showed on Wednesday, the US crude inventories unexpectedly fell by 5 million barrels last week. Meanwhile, the latest API data showed that the US crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15.

Looking ahead, the risk sentiment and US dollar dynamics will remain the key drivers influencing the oil traders, as we head into the critical US Jobless Claims and Markit Manufacturing PMI releases.

WTI technical levels to watch

At the press time, WTI rises 2.80% to 34.30, with the immediate resistance aligned at 35.00 (round number), above which the 100-DMA at 36.89 is on the buyers’ radar. To the downside, the 33.50 psychological level could offer some support. Selling pressure will likely intensify below the latter, opening floors towards the daily pivot point at 32.94.