WTI Crude Rebounds From $118 to near $120

The American WTI crude oil has rebounded from session lows under $118 to closer to $120 despite a risk-off Wall Street open. Several topics are cited as supporting oil prices and encouraging dip-buying.

Oil prices have rebounded in recent trade despite a relatively risk-off open on Wall Street after major US retailer Target gave downbeat pre-market open guidance. Front-month WTI futures were last trading higher by a little over 50 cents near the $120 per barrel mark, around $2.0 higher versus earlier session lows under the $118 level.

For now, WTI prices have remained within this week’s ranges, but the bulls will no doubt be eyeing a test of Monday’s multi-week highs near the $121 level, against the backdrop of numerous supportive crude oil-related themes.

Meanwhile, themes that were in focus last week, including the reopening of Shanghai and Beijing after months of lockdowns to contain Covid-19 and OPEC+’s underwhelming output hike guidance for July and August outlined last week are also being cited. Thus, the fundamental backdrop for crude oil markets remains bullish, hence why it shouldn’t be surprising to continue seeing WTI dips being bought into.

Strong demand for refined products (petrol and diesel), as evidenced by still very solid refining margins, plus evidence of strong global demand in the form of Saudi Arabia upping the Official Selling Price of its benchmark Arab light crude oil to Asia customers to a $6.50 premium over Oman/Dubai prices are being cited by analysts as supportive.

Since mid-May, WTI has found strong support at its 21-Day Moving Average on two occasions and the technical bullish trend looks very much still in play. In the next few weeks, many might expect WTI prices to return to multi-year highs printed back in March in the $130 area.

In the more immediate future, US crude oil inventory data in the form of the latest weekly Private API report at 20:30 GMT will be in focus as another timely indicator of the health of US demand. The US Energy Information Agency (EIA) will also be releasing its monthly oil market report at 16:00 GMT which will provide oil traders with some commentary to scrutinize.