WTI attempting a recovery above $ 47 amid risk-off, ahead of API
- Surprise Fed rate cut fuels risk-aversion across the board.
- OPEC+ cuts, weaker USD lend support to WTI bulls.
- All eyes on API data and OPEC meeting.
Amid broad risk aversion fuelled by the US Federal Reserve (Fed) surprise 50bps rate cut, WTI (oil futures on NYMEX) reverses the European rally to a new three-day high of 48.59.
At the press time, the black gold gains 0.95% to trade around 47.20, having reached a daily low of 46.78 in the last minutes.
The Fed cut the interest rates unexpectedly in a big move to tackle the coronavirus impact on the economy, which triggered an extensive rally in the safe-haven US bonds and knocked down the Treasury yields across the curve. The US equities and Wall Street futures also caved into the bearish sentiment and dragged the higher-yielding oil lower.
Despite the renewed weakness, the downside appears cushioned in the barrel of WTI, as the bulls were rescued by the Reuters report that the OPEC+ is recommending output cuts by 600k barrel per day (bpd) in Q2 through the year-end, in a move to stabilize the oil markets.
Further, broad-based US dollar selling amid Fed rate cut also lends support to the oil bulls. A weaker greenback makes the USD-denominated oil cheaper for foreign buyers.
Attention now remains on the US weekly crude stocks data due to be published by the American Petroleum Institute (API) later today at 2130 GMT for fresh trading impetus.
WTI technical levels to watch