WTI stalls recovery ahead of $ 49.50, focus shifts to API report

Oil futures on NYMEX ticked higher for the first time in a week, attempting a tepid-bounce from near four-week troughs reached a day before.

The black gold found some respite from strengthening Chinese demand, with the latest China customs data showing a 19.5% y/y rise in China’s crude oil imports in March. China is the second biggest oil consumer after the US.

Moreover, a bout of profit-taking, after the recent sell-off, cannot be ruled out, as we head towards the releases of the weekly supplies data out of the US due today and on Wednesday.   

The US crude inventories data tend to usually have significant impact on the prices, as it throws fresh light on the US supply-side scenario. Recall that the US crude stockpiles remain at record high levels.

Oil prices dropped for six consecutive days as investors’ sentiment dampened amid growing doubts about the effectiveness of the OPEC oil output cut deal and also whether the OPEC will extend the deal beyond June, when it meets next month in Vienna.

Russia said on Monday that its oil output could climb to the highest rate in 30 years if OPEC and non-OPEC producers do not extend a supply reduction deal beyond June 30. Meanwhile, Iraq’s March crude oil production rose 4% to 4.586 million barrels per day.

WTI technical levels 

A break above $ 49.54 (daily top) could yield a test $ 50 (zero figure) beyond which $ 50.50/65 (psychological levels/ 50-DMA) could be tested. While a breach of $ 49.03 (4-week lows) would expose the 48.76/75 (classic S1/ Fib S2), below which downside opens up for a key support at $ 48.