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  • WTI refrains from declining below $36.50, benefits from risk-reset off-late.
  • Abu Dhabi follows Saudi Arabia in cutting oil prices, virus woes, end of the driving season also weigh on the quote.
  • US dollar strength keeps the traders in check ahead of private inventory numbers.

WTI tick-up to $36.90 ahead of Wednesday’s European session. The black gold recently picked up bids while marking the second pullback from near $36.50 area amid the market’s consolidation of Tuesday’s heavy fall. Even so, fears of a supply glut and the further reduction in energy prices from the key producers exert downside pressure on the quote, currently down 0.70% on a day, as traders await weekly oil stockpiles from the American Petroleum Institute (API).

Although stocks in Asia-Pacific still portray the risk-aversion wave, S&P 5020 Futures bounce off one-month low as global markets await fresh clues to extend Tuesday’s pessimistic move that helped the US dollar and dragged commodities including WTI.

While the US-China tussle and fears of a no-deal Brexit offered initial challenges to the market’s risk-tone sentiment the previous day, Tesla’s 17% drop joined fears of further delay in the American stimulus to further spoil the mood. As a result, Wall Street closed in red and the US dollar index (DXY) probed one month high.

Additionally, news that Abu Dhabi followed the lead of Saudi Arabia to cut oil prices offered extra impulse to the energy bears. The update suggests increasing the push of the global oil producers even the coronavirus (COVID-19) weigh on the demand. Furthermore, the end of the driving season in the Western world adds to the WTI’s weakness. It’s worth mentioning that the global rating agency Fitch has already cut its long-term price assumptions whereas Brent contango indicates oversupply fears.

As a result, the traders await details of API Weekly Crude Oil Stock for the period ended on September 04. Considering the drastic draw of -6.36M marked during the previous week, any recovery in the data may exert additional downside pressure on the quote.

Technical analysis

Sustained trading below the joint of 50 and 200-day SMA near $41.40/45 and downbeat MACD signals raise bars for the bulls’ entry. Even so, a daily closing below the 100-day SMA level of $36.73 becomes necessary for the bears to challenge the late-May high around $34.90