WTI probes post-API declines to regain $40.00, eyes PMIs, EIA inventories

• WTI bounces off $39.64 after declining for three consecutive days.
• API stocks added 0.691M versus previous draw of 9.517M during the week ending of September 18.
• Coronavirus resurgence, strong US dollar disappoint energy buyers amid supply glut.
• Preliminary readings of September month PMIs, official oil EIA stockpiles will be the key.

WTI picks up bids near $39.75 during the early Asian session on Wednesday. The energy benchmark registered a three-day losing streak after downbeat inventory numbers from the American Petroleum Institute (API). Also weighing on the black gold prices is the coronavirus (COVID-19) resurgence and the US dollar strength.

As per the weekly Crude Oil Stock data from the API, inventories rose 0.691 million barrels versus the previous decline of 9.517 million barrels during the week to September 18.

The recent headlines suggesting a new cluster of COVID-19 cases in Brooklyn challenges the WTI’s recovery moves. Though, upbeat prints of the Commonwealth Bank’s (CBA) PMIs for September help keep the buyers hopeful.

On Tuesday, the US dollar index (DXY) rose to the highest since July 27 as market players rushed to risk-safety following the dovish comments from major central bank members. Also pleasing the greenback bulls were upbeat prints of the US housing and Richmond Fed numbers.

It should additionally be noted that the fading risks of another hurricane towards the Gulf of Mexico and the oil majors’ reluctance to keep the output cut accord, not to forget hopes of additional production from Libya, offer additional weakness to the energy benchmark.

While the global PMIs are likely to portray the recent virus-hit activity numbers, stockpile data the Energy Information Administration, for the week ended on September 18, may print receding inventory draw and may favor the oil bears. That said, the EIA Crude Oil Stocks Change is expected to recover from -4.389M prior to -2.256M during the week to September 18, 2020.

Technical analysis

Unless breaking below the 10-day SMA level of $39.31, WTI sellers may remain cautious. As a result, hopes of the quote’s recovery moves towards the $40.00 threshold and the following attempt to cross the 50-day SMA level near $41.20 can’t be ruled out.