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  • Oil breaks higher Iran-Turkey geopolitical tensions and fresh trade optimism.
  • Further upside likely amid supply risks, as markets ignore bearish API report.
  • All eyes on trade developments ahead of the US EIA Crude Stocks data.

WTI (oil futures on NYMEX) caught a fresh bid-wave last hour and broke the overnight consolidation phase to regain the 53 handle on escalating Iran-Turkey geopolitical tensions over Syria and trade-positive headlines.

Trade and geopolitics to remain the key drivers

The reports that Iran’s military launched an unannounced military exercise near the country’s border with Turkey helped put a bid under the black gold, as heightening geopolitical tensions could threaten oil supplies, already adding to the ongoing Mid-East supply disruption concerns. Tensions  prevail between Turkey and Iran-allied Syria to clear the northern region of the country of Kurdish militants from the border.

On the Mid-East supply risks, political unrest in the OPEC’s two oil producers, Iraq and Ecuador, threatens to disrupt the output, with Ecuador oil output likely to fall by one-third amid protests.

Adding to the renewed upside in the barrel of WTI, the risk-on action in the European markets amid fresh US-China trade optimism boosted the appetite for the higher-yielding oil. Earlier this Wednesday, a  Chinese official said that China was open to partial US trade deal despite tech blacklist while FT reported that China has offered to buy extra $10bn of US goods to ease trade war.

Meanwhile, markets shrugged-off the bigger-than-expected build in the US Crude Stocks, as reported by the American Petroleum Institute (API) late-Tuesday, as attention shifts towards the US government’s Energy Information Administration (EIA) weekly crude inventory data due on the cards later today at 1430 GMT.

WTI Levels to watch