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  • WTI remains pressured after reversing from two-month high the previous day.
  • Breakthrough in Vienna dragged the quote $64.13 before surprise API stockpile build recalled the bears.
  • US dollar weakness fails to please energy buyers amid mixed trading sentiment.
  • EIA data, FOMC minutes and updates from the Middle East will be the key.

WTI portrays a failure to bounce off $64.13 while dropping back to $65.25, from a recent peak of $65.65, by the end of Tuesday’s settlement. The oil benchmark recently reacted to the American Petroleum Institute’s (API) weekly inventory data to redirect the quote to the south that earlier slumped on speculation of Iran’s return to the nuclear deal.

API Weekly Crude Oil Stock for the week ended on May 14 dropped below -2.533M previous to +0.62M, suggesting a heavy build in the stockpiles, per the industry data.

Late Tuesday, news broke, quoting Russian diplomat Mikhail Ulyanov, suggesting a breakthrough in the nuclear talks in Vienna that push Iran to rejoin the global treaty and contribute to the peace. While the news initially dragged WTI to $64.13, the following update suggesting no breakthrough but significant progress with unresolved issues triggered the bounce off, which ultimately faded.

In doing so, the black gold refrains from cheering the US dollar weakness amid mixed sentiment portrayed by downbeat equities and no major moves by the US Treasury bond yields.

It’s worth mentioning that the Colonial Pipeline is quickly restoring the supply outage and the OPEC+ is also on the move to curtail voluntary production cuts, which in turn suggest further downside for the oil prices. However, anticipated global economic recovery, backed by faster vaccinations, seems to favor the oil buyers of late. Also on the price-positive side could be the geopolitical tension in Gaza.

Looking forward, official oil inventory data from the Energy Information Administration (EIA), expected 1.68M versus -0.427M, could exert additional downside pressure on the commodity price. Though, the US Federal Open Market Committee (FOMC) meeting minutes will be the key to watch.

Technical analysis

Despite recent pullback, WTI stays above 21-day SMA and an ascending trend line from April 05, respectively around $64.25 and $64.00, which in turn signals further upside of the oil prices.

 

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