WTI consolidates the relief-rally below $52
- WTI benefits from China tariffs cut news, OPEC+ supply cuts hopes.
- Bearish EIA inventory report, broad USD strength caps the rally.
- Crude Oil Futures: Rallies seen faltering near-term?
WTI (oil futures on NYMEX) built on Wednesday’s sharp reversal from a 13-month low of $49.47 and went to hit a new five-day high at $52.19 in early European trading.
The barrel of WTI extended its bullish momentum into a second straight session today, as the sentiment remains underpinned by receding China coronavirus fears and on renewed US-China trade optimism, especially after China announced that it would cut the tariffs on US imports, effective February, 14th.
Moreover, expectations of the OPEC and its allies (OPEC+) looking to extend its output cuts amid rising demand growth concerns, in the face of a likely negative economic impact of the China coronavirus rapid-spread internationally.
The bulls, however, failed to extend the relief rally, leaving the black gold to now consolidate below the 52 mark. Persistent demand for the US dollar across its main competitors, in the wake of the recent series of upbeat US fundamentals, appears to the further upside in the USD-sensitive oil.
Further, a bigger-than-expected risk in the US weekly Crude Stocks data, published by the Energy Information Administration (EIA) on Wednesday, also remains a drag on the commodity. The EIA data showed the US crude stockpiles rose by 3.4 million barrels for the week ended Jan. 31 vs. a rise of 3 million barrels expected.
Looking ahead, the bulls will remain cautious, as the OPEC+ technical meeting extends into the third day. The meeting this week is to consider increasing output cuts by an additional 500,000 barrels per day or to extend current cuts beyond March. OPEC+ ministers are due to meet on March 5 and 6, per Reuters.
WTI Technical levels to consider