WTI consolidates API data-led recoveries below $43.00, EIA eyed

• WTI reverses the recoveries from $42.95 amid a lack of major catalysts.
• US dollar weakness joins higher than expected API draw to keep the bears away.
• Virus woes, Sino-American tussle confront risk-on mood ahead of the official stockpiles data from EIA.

WTI trims the early Asian session gains while declining to $42.85 as markets in Tokyo open for trading on Wednesday. The energy benchmark earlier cheered higher than expected oil inventory data from the American Petroleum Institute (API). It should also be noted that the latest declines in the oil prices fail to respect the US dollar weakness and hopes of further stimulus from America.

API Weekly Crude Oil Stock for the period ending of August 14 dropped below -2M market consensus to -4.264M level. With this, the private inventories shrank for the fourth consecutive week, though with receding levels in the last three.

Talking about other fundamentals, the coronavirus (COVID-19) worries recently challenge the energy demand as rising cases in Germany and France calls for fresh lockdowns that have been ruled out off-late. Elsewhere, cases in the US, Australia and China have been easing  but markets doubt the testing.

It should also be noted that the cancellation of the US-China trade deal review follows American President Trump’s call to not talk with China for now, which in turn question the energy demand from the world’s largest consumers.

On the contrary, US House Speaker Nancy Pelosi recently stepped back from the Democratic Party’s initial offer and showed readiness to cut the $3.5 bid in half to reach an agreement over the much-awaited COVID-19 relief package. The news propelled the market’s risk-tone sentiment and can boost the black gold if practiced.

Moving on, the Energy Information Administration (EIA) is expected to print -2.475M level for the US Crude Oil Stocks Change during the week ended on August 14. While the stockpile becomes higher than the previous -4.512M, any surprises can help the energy benchmark to remain firm.

Technical analysis

Unless crossing the monthly top near $43.65, holding the keys for the late late-February low near $44.00, fears of the return of $42.00 can’t be ruled out.