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  • WTI refrains from respecting the previous inaction as it again heads to challenge 50-DMA.
  • API data showed inventory draw, the US keeps being harsh on Iran.
  • EIA data will be followed for fresh impulse.

With the escalating tension concerning Iran and a surprise draw in API stockpiles, WTI takes the bids to $56.15 during early Wednesday.

In its Crude Oil Stocks report for the week ended on August 16, the American Petroleum Institute (API) says that a surprise 3.5 million barrels of decline was witnessed versus previous addition of 3.7 million barrels.

The US Secretary of State Mike Pompeo recently said that the US will take every action consistent with its sanctions to prevent Iranian tanker from delivering Oil to Syria. Elsewhere, Australia’s Prime Minister Scott Morrison said, as per the Australian, that Australia will join the international mission to protect shipping through the Strait of Hormuz, contributing a navy frigate, a maritime patrol aircraft, and planning and operations personnel.

Additionally, talks of explosions in Iraq and Iran’s readiness to counter the US keep pleasing the energy buyers whereas trade uncertainty keeps an upside in check.

Looking forward, Crude Oil Stocks Change report from the Energy Information Administration (EIA) for the week ended on August 16 will become the official announcement of the US oil inventories and hence will be closely observed. If the inventory levels match or slip below -1.885M forecast, energy prices can rise further.

Technical Analysis

FXStreet Analyst Ross J. Burland spots price run-up towards 50-day moving average (DMA) as a bullish signal:

The price of  oil  is resting up in the high end of the 55 handle in WTI while the price finally got above the 20 daily moving average and then  pierced the 50-DMA into the 56 handle overnight.   Bulls are back in control and there is room  for an advance  to the 58 handle to meet trend line  resistance  from here while on the downside, bears can target a drop to the 52 handle and the 61.8% Fibo at 51.70 on the wide.