- Crude oil extends gains on Wednesday in the Asian session.
- API data records drop in US crude inventories, signals rise in energy demand.
- A subdued US dollar also lends support to oil prices.
Oil prices maintain the upward trend in the Asian session on Wednesday. The optimism surrounding the global economic recovery lifts the energy demand while the movement is further corroborated by the recent depreciation in the US dollar.
At the time of writing, WTI is trading at $66.45, up 1.33% on the day.
A host of economic data concluded the fact that domestic demand is rising on account of the reopening of economic activities across the region and provided the black gold with much-needed support.
The American Petroleum Institute (API), data suggested that the US inventories fell by 7.7miilions barrels in the week ended April 30th. The fall in crude oil inventories in the world’s biggest oil consumer signals strengthening demand prospects. The US, Eurozone, and UK are witnessing a turnaround in their economic activity backed by government expenditures and measures.
Meanwhile, OPEC and its members are expecting a revival in consumption in the second half of the year. Adding to the demand outlook, the EU Commission plans to allow travellers who are fully vaccinated to travel within the EU.
Moving on, the dollar-denominated commodity is enjoying a recent downturn in the US dollar index (DXY), which is consolidating gains near 91.30, suggesting that investors are looking towards riskier assets at the expense of the safe-haven dollar.
However, rising corona cases in Asia-pacific, especially in India, which is the third, largest consumer of energy, and Japan could limit the gains beyond $68.
Meanwhile, the dynamics around the US dollar will continue to influence oil prices.
WTI additional levels