WTI rebounds towards $40 mark ahead of API data

• WTI cuts losses in tandem with the European equities.
• US oil still remains in the red amid virus woes, OPEC+ easing hopes
• Focus shifts to US CPI, API data for fresh trading impulse.

WTI (August futures on Nymex) is looking to regain the 40-level following a quick rebound from the daily lows reached just above the 39 mark.

Despite the recovery, the US oil sheds about 0.70% to trade around 39.80 region, as the bulls try another attempt to regain control in the European session.

The sentiment around the black continues to remain dampened by increased expectations that the OPEC and its allies (OPEC+) will ease the output cut policy when it meets this Wednesday. Meanwhile, a Bloomberg report added that the OPEC+ is considering raising output by 2 million barrels per day (bpd).

Moreover, the growing coronavirus pandemic fears and its impact on the economic recovery, especially after the renewed lockdown imposed in California, weighed on the market mood. The fading hopes of a global economic rebound temper the prospects of the oil demand recovery, which collaborates with the bearish pressure on oil.

Furthermore, the higher-yielding oil also bears the brunt of the elevated US-China tensions over offshore resources in the South China Sea. Over the last hour, however, a recovery in the European equities and bounce in the S&P 500 futures have eased the safe-haven demand for the US dollar. A broad-based dollar retreat is aiding the recovery in the USD-denominated barrel of WTI.   

Attention now turns towards the US CPI and American Petroleum Institute’s (API) weekly Crude Stocks Change data for near-term trading opportunities in oil.

WTI technical levels to watch

“Two short-term ascending trend lines, surrounding $39.10 and $39.00 respectively, seem to restrict the black gold’s further weakness. If at all the oil prices slip below $39.00, 61.8% Fibonacci retracement of June 15-23 upside near $37.30 will be the key to follow. On the upside, $40.00 and $40.20 can offer immediate resistance to the quote ahead of highlighting a downward sloping trend line from June 23, at $41.00 now,” explains Anil Panchal, FXStreet’s Analyst.

WTI additional levels