WTI drops back below $ 52 ahead of EIA data

WTI (US oil futures on NYMEX) failed to sustain at higher levels again and surrendered $ 52 handle, as markets resorted to profit-taking ahead of the crucial US EIA crude inventory report due later in the American session.

The latest leg down in the black gold is mainly driven by a solid rally seen in the US dollar against its major peers, as the latest hawkish remarks from the Fed Chair Yellen bolstered the rate hike expectations. A stronger US dollar makes the USD denominated oil more expensive for the holders in foreign currencies and vice-versa.

Oil prices witnessed two-way businesses on Tuesday, initially dropping from multi-month tops on profit-taking, while the bullish API inventory report offered some respite to the bulls, sending the prices back above $ 52 mark.

The API reported late-Tuesday that the US crude supplies unexpectedly fell by 761,000 barrels for the week ended Sept. 22. 

Focus now shifts towards the US Energy Information Administration (EIA) crude stockpiles data release for the next direction. At the time of writing, WTI trades modestly flat at $ 51.88, while Brent drops -0.20% to $ 57.80 levels.

WTI technical levels 

Jeffrey Halley at OANDA ASIA-PACIFIC, noted: “Support (is seen) at 51.00, the overnight low, followed by trend line support at 50.30. Resistance sits at 53.60 today, and this is the beginning of a massive resistance zone between 53.60 and 54.60 that has capped all rallies for the past year. WTI needs to close above this zone before longer-term bulls can start to believe the light at the end of the tunnel is not the train coming the other way.”