WTI takes the bids above $39.00 on hurricane news, US dollar weakness
- WTI extends Tuesday’s run-up to refresh one week high near $39.30.
- Almost a quarter of oil output goes offline as hurricane Sally moves towards the Persian Gulf.
- US dollar stays on the back foot for the third day in last four ahead of the Fed meeting.
- API data flashed surprise draw, EIA inventories awaited.
WTI rises to $39.25, up 1.64% on a day, before traders in Brussels arrive for Wednesday’s work. The black gold recently picked bids as energy output loss, due to the hurricane Sally, joins price-positive stockpile data from the American Petroleum Institute (API). Also favoring the oil buyers could be the US dollar weakness and a mild recovery in the market’s risk-tone sentiment.
As per Reuters, relying on the US government updates, “500K bpd (barrels per day) of offshore crude oil production and 28% of natural gas output shut in the Gulf of Mexico on Tuesday according to the US interior Government.”
The stoppage in the output can be compared with Tuesday’s API Weekly Crude Oil Stock, -9.517M versus +2.97M, for the period ending on September 11.
With the halt in energy output joining the surprise draw in private inventory data, WTI traders anticipate the official stockpile figures, published by the Energy Information Administration (EIA, to defy the 2.049M forecast versus 2.032M prior.
Other than the oil specific catalysts, the declines in the US dollar index (DXY) also favor the commodity prices. The greenback gauge drops 0.05% to 93.04 while flashing a three-day losing streak by the press time. The reason for the USD’s weakness could be traced from the market’s pre-Fed cautious sentiment.
Furthermore, S&P 500 Futures also reverse the early-day losses to rise 0.10% to 3,399 as we write. Although markets struggle for a clear direction, US President Donald Trump’s comments that the coronavirus (COVID-19) vaccine could be three or four weeks away favored the risk-takers off-late.
While EIA data and hurricane headlines will be the key to determine near-term oil prices, the US dollar moves on the back of the Federal Reserve’s action also become important to watch.
Technical analysis
Sustained trading above 100-day SMA, currently around $37.80/85, directs the WTI quote towards the $40.00 round-figures ahead of highlighting the 200-day SMA level of $40.95.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
