WTI: Upside attempts remain capped near $40.50

• WTI trades bid amid risk-on mood, upbeat China PMI.
• USD rebound, demand concerns weigh on WTI’s recovery.
• Next of relevance remains the US Spending and Drilling data.

Following a volatile session witnessed on Thursday, WTI (futures on Nymex) is trading in familiar ranges just above $40 mark so far this Friday.

The US oil faced rejection near 40.50 region on a few occasions earlier today, as it now adds 0.60% to trade at 40.16. Despite the range play, the black gold eyes the third straight monthly gains.

The barrel of WTI remains underpinned by a better market mood in Europe, as markets ignored mixed Eurozone inflation and growth numbers amid the end of the month repositioning. Also, oil bulls cheered the upbeat official Chinese Manufacturing PMI, which beat estimates with 51.1 in July. Note that China is the world’s second-biggest oil consumer.

The gains, however, remained capped by the broad-based US dollar recovery and coronavirus pandemic-induced concerns over the fuel demand. The greenback bounces-off two-year lows, as traders take profits off the table ahead of the US Personal spending data and ongoing fiscal stimulus negotiations.

Markets also look forward to the Baker Hughes US oil rigs count data for near-term trading opportunities in oil.

WTI technical levels to watch

“The energy benchmark dropped below the key $40.85/80 support confluence, now resistance, comprising 21-day SMA and an ascending trend line from June 25. The fall gains support from downward sloping RSI, which in turn directs the quote towards a 50-day SMA level of $39.00. However, the $40.00 threshold may offer an intermediate halt during the declines,” explains Anil Panchal, FXStreet’s Analyst.

WTI additional levels