WTI stays above $40.00 amid US dollar weakness, risk-on mood

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  • WTI extends Wednesday’s run-up towards a one-month-old falling trend line.
  • Hopes of US stimulus keep market sentiment positive, US dollar weakness adds strength into commodities.
  • Key indicator from the big data company suggests oil market recovery.
  • Widespread job losses in the US and the UK join virus woes to tame the bulls.

WTI takes the bids near $41.41, up 1.14% intraday, while heading into Thursday’s European session open. The energy benchmark cheers broad weakness of the US dollar, as well as hopes of American stimulus, while stretching the previous day’s gains. It should also be noted that the surprise draw in the official oil inventories, shared by the Energy Information Administration (EIA), as well as an increase in the North American Frac Spread Count, also favor the black gold prices.

The US dollar index (DXY) drops 0.16% on a day to 93.68 by the time of the press as global markets turn risk-positive amid hopes of further stimulus. Not only the US Congress but the Japanese government is also up for another liquidity boost to avoid negative economic impacts of the coronavirus (COVID-19).

Elsewhere, numbers from the big data company Primary Vision suggest that the North American Frac Spread Count, which tracks the fracking completion crews currently finishing off wells, surged 101 from 12 last week.

Additionally, the EIA Crude Oil Stocks Change for the week ended on September 25 also marked a surprise draw on Wednesday. The weekly official stockpiles slipped below +1.569M forecast and -1.639M prior to -1.98M during the reported period.

On the contrary, job cuts by the American entities like Disney, Goldman Sachs and Allstate join updates suggesting 7,500 job loss to the UK due to the Brexit to challenge the oil demand. Furthermore, chatters concerning Britain’s nearness to national lockdowns, due to the virus, are an extra burden on the commodity prices.

Moving on, traders will keep eyes on the US ISM Manufacturing PMI for fresh impulse as a recovery in the important manufacturing activity gauge indicates upbeat demand going forward. Forecasts suggest the September month data cross 56.0 prior levels with the 56.3 mark.

Read: ISM Manufacturing PMI Preview: Low bar for upside surprise could turn dollar-positive

Technical analysis

Unless breaking the monthly resistance line, currently around $40.55, oil buyers are less likely to target September 18 top surrounding $41.75. As a result, sellers targeting the weekly low of $38.53 remain hopeful on the quote’s break below the $40.00 threshold.

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