WTI jumps beyond $ 53 ahead of API inventory report

Oil futures on NYMEX rebounded on Tuesday, as the sentiment was boosted by a weaker US dollar overnight as well as on output cuts announced by the OPEC on Monday.

WTI trades above all major DMAs

Currently WTI advances +0.90% to $ 53.24, extending the rebound from $ 52.21, yesterday’s low. Oil prices found fresh bids near $ 52.65 region, which added extra legs to the rebound in oil, in light of last Sunday’s Vienna meeting, where the OPEC members noted that of the almost 1.8 million bpd they had agreed to remove from the market starting on Jan 1, 1.5 million bpd had already been cut.  

Moreover, broad USD weakness seen in Asia combined reports of declining global oil inventories further collaborated to the upside. Analysts at Bernstein Energy noted global oil inventories declined by 24 million barrels to 5.7 billion barrels q/q in Q4 2016, while adding, “This is the biggest quarterly decline since the fourth quarter of 2013, confirming that inventory builds are now reversing as the market shifts from oversupply to undersupply."  

Next of note for the commodity remains the US API weekly crude stockpiles report, which will provide fresh insights on the US supply-side scenario.

WTI technical levels

A break above Jan 17 high of $ 53.52 could yield a test of $ 54 (zero figure). While a breach of support at $ 51.87 (50-DMA) would expose the psychological level of $ 51.