WTI rallies further beyond $57.50 level, hits 4-month tops ahead of EIA report

   “¢   The overnight bullish API report remained supportive of the positive momentum.
   “¢   News that the US plans more Venezuela-related sanctions provided an additional boost.
   “¢   Traders now eye official EIA weekly crude inventory report for some fresh impetus.

WTI crude oil continued scaling higher through the early North-American session and climbed to near four-month tops, above the $57.50/barrel mark in the last hour.

The commodity remained supported by the overnight API report, showing that the US crude supplies fell by 2.58 million barrels for the week ended March 8 as against a build on 7.29 million barrels in the previous week.  

The positive momentum got an additional boost after the Energy Information Administration (EIA) revised down its projected 2020 production figure to 13.03 million bpd from 13.20 million bpd. The revision was small but was still comforting for bullish traders and largely offset EIA’s forecast for 2019/20 global oil demand, now seen at 1.45 million bpd and 1.46 million bpd respectively.

This coupled with news that the US is planning some very significant Venezuela-related sanctions in the coming days and reports that Saudi Arabia is planning to cut its crude oil exports in April to below 7 million bpd were further cited supporting the ongoing upward trajectory.

Moving ahead, market participants now look forward to the official EIA weekly US crude oil inventory report, scheduled for release at 14: GMT for some fresh impetus. The report is expected to show an increase in stockpiles by 2.861 million barrels and seems unlikely to dent the prevalent bullish sentiment.

Technical levels to watch

A sustained move beyond the $58.00 mark has the potential to continue lifting the commodity towards reclaiming the $59.00 round figure mark, with some intermediate resistance near the $58.40 region. On the flip side, the $57.00 handle now seems to protect the immediate downside, which if broken might prompt some technical selling and accelerate the slide further towards $56.65-60 support area en-route $56.20-25 zone.