WTI: Bears take over after surprise API stocks build, eyes $37 mark

• WTI bears back in the game on bearish API crude stocks data.

• A positive flip in US stocks futures point to risk-on.
• All eyes on coronavirus updates, EIA data for fresh directives.

WTI (July futures on Nymex) is back on the $37 level in early Asian trading this Wednesday, as the sellers return following an unexpected build in the US crude stocks data, as published by the American Petroleum Institute (API) late Tuesday.

The latest API data showed that the US crude inventories rose by 3.9 million barrels in the week to June 12 to 543.2 million barrels against expectations for a draw of 152K barrels.

Further, markets fret over the intensifying coronavirus spread in the US states, with a potential second-wave, which could likely pressure the US authorities to re-impose lockdown measures to prevent the infection spread.

A likely thaw in the economic activity in the world’s top oil consumer, the US, could re-ignite demand concerns for oil and its product. These fears collaborate with the latest downtick in the black gold.

On Tuesday, oil prices saw good two-way businesses, as it rose to fresh three-day highs of 39.06 before losing $2 to hit a low of 37.08 in a span of an hour in NY trading. The volatility was mainly driven by the Saudi Arabian headlines.

Reuters reported on Wednesday that Saudi oil exports to the US plunge toward the lowest level in 35 years amid self-imposed output cuts and the virus-induced demand hit.

However, the uptick in the USD-sensitive quickly faded, as the US dollar regained momentum across the board on stronger US Retail Sales data and anti-virus drug news.

Looking ahead, markets await the official US government data on the weekly stockpiles, which will be published by the Energy Information Administration (EIA) later today at 1430 GMT.  

WTI technical levels to watch

WTI faces immediate resistance at 38.50 (psychological levels) while the next one is aligned at 39.06 (Tuesday’s high). Meanwhile, the 5-DMA at 37.43 should likely keep the buyers hopeful. A break below the last could open floors towards 37.00 (round number) and 36.06 (20-DMA).

WTI additional levels