WTI headed to $ 56.80 – key support, API data eyed

• DXY resumes post-US tax cuts upside.
• API data to show a drop in the US crude stockpiles.

WTI (oil futures on NYMEX) extends its bearish momentum into a second day today, as markets remain nervous heading into the US crude inventories data due to be released late-Tuesday.

WTI: Corrective mode from 2-year tops still intact

The black gold fell further into losses and hit a fresh three-day lows of $ 57.20 in the European session, as the bears regained poise on the back of resurgent US dollar demand across the board, in the wake of Saturday’s Senate approval on the US tax reform bill. A stronger US dollar makes the USD-denominated oil expensive for the foreign buyers and vice-versa .

Oil prices also failed to benefit from the expectations that the API crude inventory report will show a drawdown in the crude stockpiles in the week ended Dec. Meanwhile, Goldman Sachs upward revision to the 2018 oil-price forecasts also had little impact on the commodity, as the latest remarks from the IEA Head Atkinson dented the investors’ sentiment. Also, the heightened expectations of rising US oil output levels offset the OPEC output cuts extension news, collaborating to the downbeat tone around oil prices.

Focus now shifts towards the weekly US crude inventory reports due to be published by the API for fresh trading impetus. At the time of writing, WTI drops -0.30% to $ 57.30 while Brent declines -0.19% to $ 62.33.

WTI Technical Levels

Higher-side levels: $ 59.03 (2-year highs), $ 60 (psychological levels), $ 61.82 (June-mid 2015 high)

Lower-side levels: $ 56.82/75 (Nov 29 & 30 low), $ 56.32 (Nov 21 low), $ 56.00 (zero figure)