- WTI benefits from the risk-on action in European equities.
- Concerns over weakening fuel demand could cap the upside.
- Corrective bounce to extend ahead of US NFP, rigs data?
WTI (futures on Nymex) has caught a fresh bid-wave in the European session, extending the rebound from monthly lows of $40.23.
Following a brief consolidative stint in Asia, the bulls have regained control and look to test the 42 level amid resurgent demand for the riskier/ higher yield assets across the financial markets.
The European stocks jumped back on the bids, erasing early losses while ditching the sell-off in their global peers. Mergers talks between two Spanish banks lifted the sentiment across the European markets.
Meanwhile, listless trading in the US dollar across its main peers also offered support to the US oil. A weaker greenback makes the USD-denominated oil cheaper for foreign buyers. The US ollar has paused its recent recovery momentum, treading water ahead of the critical US non-farm payrolls data.
Despite the bounce, oil traders remain cautious amid looming demand concerns, fuelled by worries over the global economic recovery from the coronavirus impact. Declining US domestic gasoline demand combined with soaring distillates inventories at Asia’s oil hub, Singapore, underscores the weakening demand for the black gold.
All eyes now remain on the all-important US NFP data for fresh dollar trades, which will eventually influence the oil price action. The Baker Hughes US rigs count data will also offer some fresh trading incentives.
WTI technical levels to watch
“The focus now is on Friday's close. Acceptance below Thursday's low of $40.22 would revive the immediate bearish view and expose support at $38.72 (July 30 low). On the other hand, a close above Thursday's high of $41.79 would confirm reversal higher and allow a re-test of 43.78 (Aug. 26 high).,” FXStreet’s Analysts Omkar Godbole explained.
WTI additional levels
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