WTI rises towards $53.00 on surprise draw in API inventories

• WTI jumps +20 pips after private stockpile marked hefty drop for week ended on January 22.
• IMF’s upbeat economic forecast, US dollar weakness adds to the bullish momentum.
• Pre-Fed cautious can probe the bulls, EIA data also eyed for immediate direction.

WTI rose to $52.70 following a quick run-up on the API inventory data by the end of Tuesday’s settlement. The energy benchmark also gained momentum as the US dollar weakness and hopes of recovery in the global economy, coupled with the upbeat coronavirus (COVID-19) vaccine news, favored commodities.

As per the latest Weekly Crude Oil Stock report from the American Petroleum Institute (API), stockpiles depleted 5.272 million barrels versus the previous addition of 2.562 million barrels. The update joins the likely decrease in oil supply as Iraq is up for reducing its output while compensating for the breach of the OPEC quota.

Other than the oil-specific news, welcome updates from the International Monetary Fund (IMF) also improves the economic optimism and favor the commodity prices. In its latest report, the IMF revised its forecast for 2021 global economic growth to 5.5% from 5.2% in October’s publication. Though, the Washington-based organization did cite ‘exceptional uncertainty’ about the economic outlook while highlighting the renewed waves and variants of covid-19.

It should be noted that the US dollar weakness, mainly due to the improvement in the market sentiment and the ECB’s hint of investigation of the EUR/USD quote also favored the WTI bulls. The US dollar index (DXY) snapped the two-day winning streak while stepping back from the weekly top on Tuesday as market mood cheered hopes of more and strong vaccines while paying a little heed to the delay in the US fiscal stimulus, for now.

Moving on, official inventory data from the US Energy Information Administration (EIA), up for publishing at 15:30 GMT, becomes the key for the oil traders. Forecasts suggest +0.603 million barrels of additional stockpiles versus the prior 4.351 million barrels.

Also important will be the US Federal Reserve’s first monetary policy of 2021. The Fed is more likely to strike a dovish tone and the same can help the US dollar to regain its strength, which in turn could probe the WTI bulls.

Read: Fed Preview: Fearing market froth or boosting Biden’s stimulus? Three scenarios

Technical analysis

WTI stays mildly positive inside a two-week-old falling trend line and 21-day SMA, respectively around $53.65 and $51.55.