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  • Risk-on sentiment, tighter oil supplies boost oil.
  • Dollar weakness on economic recovery hopes also support.
  • Focus US ISM Services data and weekly supply reports.

WTI (August futures on Nymex) briefly regained the $41 barrier for the first time since June 23, although the bulls failed to resist above that level.

At the press time, the US oil rises 0.60% to trade at 40.88, consolidating the latest uptick before the next push higher.

The prices derive support from tighter global oil supplies, in light of last week’s draw in the US crude inventories and falling OPEC output levels. The OPEC’s oil production fell to its lowest in decades, as its members adhere to the OPEC+ oil output cuts deal for the third straight month in July.

Further, expectations of a quicker global economic rebound, amid improving manufacturing activity in China, Euro area and the US, revive optimism over the oil demand growth outlook and thus, render oil-positive.

Meanwhile, broad US dollar weakness amid the upbeat market mood also underpins the USD-sensitive oil. Despite the upbeat tone around the black gold, the bulls remain wary following Kuwait’s Oil Ministry’s comments that oil production resumed early July at the Wafra oilfield.

The oil is co-owned by Kuwait and Saudi Arabia and the production restarted after a five-year halt; the Ministry added.  

Looking ahead, the overall market sentiment and the US weekly crude supplies data remain the main catalysts for the next direction in oil prices.

WTI technical levels to watch

“A clear break beyond $41.00 will quickly piece the June month top surrounding $41.60 to aim for February lows close to $44.00. Meanwhile, a $39.90 mark comprising Friday’s low and June 29 top can question the black gold’s short-term losses ahead of the key $38.95/90 support confluence including 21-day SMA and an ascending support line from May 28,” FXStreet’s Analyst Anil Panchal noted.

WTI additional levels