WTI refreshes multi-month high above $61.50 on bullish API data, EIA inventories eyed

• WTI jumps to the highest in 13 months as upbeat API stockpiles join the demand-supply imbalance.
• API Weekly Crude Oil Stock dropped more than prior -3.5M during the week ended on February 12.
• Deep freeze in Texas, output reduction by major producers and hopes of economic recovery add to the bullish mood.
• EIA data, China’s return will be the key.

WTI takes bids near $61.70, the fresh high since January 2020, during the early Asian session on Thursday. The oil benchmark recently gained bids on the lower-than-previous weekly inventory data from the American Petroleum Institute (API). Also favoring the bulls could be the current production halt in the Permian Basin and the hopes of the US stimulus as well as global recovery from the coronavirus (COVID-19) pandemic.

In its latest release for the week ended on February 12, the API Weekly Crude Oil Stock slipped below -3.5 million barrels to -5.8 million barrels.

The stockpile draw was largely anticipated as the major producers in the Gulf of Texas find themselves in a deep freeze as heavy cold waves stopped industry wheels off-late. Markets chatters suggest, also taking clues from Bloomberg’s piece, suggest a third of the US oil output is on halt due to this.

Elsewhere, production restrictions by Saudi Arabia and Libya join the Russian cap on energy exports also curb the supply wheel.

On the contrary, demand-side push keeps strengthening amid expectations of the economic recovery as covid vaccinations are on the hike. Also on the positive side are strong talks that the $1.9 COVID-19 stimulus from the US is about to hit the floor as soon as next month.

It should, however, be noted that the US dollar’s gains during the last two days have mostly been ignored by the oil bulls that generally step back on the USD run-up.

Looking forward, the official oil inventory figures by the Energy Information Administration (EIA) for the stated period ending on February 12, expected -2.175M versus -6.644M prior, will be important to watch. It should be noted that China returns to trading after a long break due to the Lunar New Year and its reaction to the latest market news should be observed closely for fresh impulse.

Technical analysis

Unless breaking the $60.00 threshold, WTI buyers can keep the previous year’s top near $65.50 on the radar. In doing so, the September 2019 peak of $63.12 can offer an intermediate halt during the rise.