WTI stalls four-day winning streak, tests $40 ahead of API data

• WTI downed amid risk-aversion, stall in the USD decline.
• Coronavirus concerns weigh on the market sentiment.
• Focus shifts to the API crude stocks data and US election debate.

WTI (futures on Nymex) turns negative for the first time in five trading sessions on Tuesday, having reversed half the Monday’s 1% rally to five-week highs of $40.80.

The US oil sheds 0.91% to trade around $40.23, as we write, awaiting the American Petroleum Institute’s (API) weekly crude inventories data for fresh trading impetus.

The renewed weakness in the black gold can be mainly attributed to a major turnaround in the risk sentiment in Europe, which has re-fuelled the haven demand for the US dollar across the board.

Reports that Germany is considering imposing fresh restrictions limiting social gatherings underscore rising fears of the coronavirus resurgence in the Old Continent, weighing negatively on the market mood.

Further, markets turn cautious ahead of the first US Presidential election debate between the incumbent Donald Trump and Democratic candidate Joe Biden scheduled this Wednesday.

On Monday, the WTI barrel rallied in tandem with the global stocks on hopes of an additional US fiscal stimulus, as the House Speaker Pelosi and Treasury Secretary Steven Mnuchin push a new $2.2 trillion plan pre-Election.

More so, escalating geopolitical tensions between Armenia and Azerbaijan over the weekend, raising concerns over the South Caucasus, a corridor for pipelines carrying oil and gas to world markets, and collaborated with the rally above the $40 mark.

WTI technical levels to watch

“Not only the immediate resistance line, currently around $40.85, 200-bar SMA and 61.8% Fibonacci retracement level of WTI’s August-September downside, around $41.00, also acts as the key upside barrier for the black gold. As a result, odds of the commodity’s pullback to the $40.00 threshold, also comprising an upward sloping trend line from September 14, are brighter,” FXStreet’s Analyst Anil Panchal explained.

WTI additional levels