WTI rallies hard towards $ 53, fresh 5-month tops

WTI (US oil futures on NYMEX) reversed the Asian corrective slide and resumed the recent bullish momentum above $ 52 threshold, as markets cheer rising oil demand from the world’s second largest oil consumer, China. 

China’s crude oil inventories dropped by 3.42% in August - Xinhua

The latest leg up in the black gold is also driven by renewed weakness seen in the US dollar against its major peers, as a cautious tone sets into the markets ahead of the UK PM May’s speech. A weaker US dollar makes the USD denominated oil cheaper for the holders in foreign currencies and vice-versa.

Oil prices dipped in Asia, as markets reacted to the latest EIA report, which showed an unexpected rise in gasoline stocks. However, the bulls quickly regained poise amid an unexpected draw seen in the US crude stockpiles, suggesting increased refinery demand, as the refiners resumed operation following Hurricane Harvey last month.

Also, the prices derive support from the renewed threat by the Turkish President Tayyip Erdogan to cut off the Kurdish exports. Markets also remain expectant of a further decline in the US rigs count, which also helps underpin oil prices.

At the time of writing, WTI rallies 1% to $ 52.66, while Brent rises +0.76% to test $ 58 levels.

WTI technical levels 

Jeffrey Halley at OANDA ASIA-PACIFIC, noted: “Support (is seen) at 51.00, followed by trend line support at 50.30. Resistance sits at 53.60 today, and this is the beginning of a massive resistance zone between 53.60 and 54.60 that has capped all rallies for the past year. WTI needs to close above this zone before longer-term bulls can start to believe the light at the end of the tunnel is not the train coming the other way.”