WTI erases majority of daily gains, trades near $42 ahead of API data

• WTI turned south after climbing to $43 area on Tuesday.
• EIA raises forecast for 2020 world oil demand growth by 40,000 bpd.
• API will release its Weekly Crude Oil Stock data later in the day.

Crude oil prices started the week on a strong footing and the barrel of West Texas Intermediate (WTI) gained more than 1% on Monday. With the market sentiment remaining upbeat on Tuesday, the WTI extended its rally and touched a daily high of $42.91 but struggled to preserve its bullish momentum. As of writing, the WTI was virtually unchanged on the day at near $42.

Demand outlook continues to impact WTI’s performance

Earlier in the day, Russian President Vladimir Putin announced that they have developed a coronavirus vaccine and said that they could start using it as early as October. This development revived hopes for a steady recovery in the global energy demand and helped crude oil prices push higher.

Additionally, the US Energy Information Administration (EIA) in its latest monthly report noted that it raised its forecast for 2020 world oil demand growth by 40,000 barrels per day (bpd). With this update, the EIA now sees a decline of 8.11 million bpd on a yearly basis.

On the other hand, the lack of progress in coronavirus relief talks in the US amid the political impasse seems to be keeping crude oil’s limited for the time being. Later in the day, the American Petroleum Institue will release its Weekly Crude Oil Stock data.

Technical levels to watch for