WTI clings to gains near one month high, EIA report in focus

WTI crude oil continued gaining traction and extended the bullish momentum further beyond $51.00/barrel mark to its highest level since March 7.

Currently trading around mid-$51.00s, the black gold extended overnight gains led by a report showing a larger-than-expected drop in the US crude supplies. According to the API report, the US crude stockpiles unexpectedly fell by 1.83 million barrels in the week ended March 31. 

Tuesday's API data sparked hopes that the official report from the Energy Information Administration (EIA) on Wednesday will reflect similar trend and show a fall in inventories by 0.530 million barrels. If the drawdown is indeed confirmed, it would be the first decline following two consecutive weeks of rise in inventory levels. 

Also collaborating to the commodity’s up-move on Wednesday was an outage at the largest UK North Sea oilfield extended an additional support. The outage seems to have offset worries over an increase in oil production from Libya's Sharara field and remained supportive of the commodity's move.

Meanwhile, a subdued US Dollar price-action was seen lending additional support and lifted it to one month high level near $51.70 region. Hence, the Fed minutes, due later during the NY trading session would also grab investors' attention and derive demand for dollar-denominated commodities – like oil.

   •  FOMC minutes in the limelight – BBH

Technical levels to watch

Momentum above session peak resistance near $51.70 level could get extended towards $52.00 round figure mark, above which the commodity seems all set to head towards testing $52.55 intermediate resistance ahead of the $53.00 handle. On the downside, retracement back below $51.00 mark, leading to a subsequent break below $50.80 horizontal support, is likely to accelerate the slide towards $50.25 intermediate support en-route weekly lows support near $49.90-85 region.