WTI consolidates gains around $71.50 despite upbeat API inventories, EIA stockpiles eyed

• WTI retreats from weekly high, prints mild gains as Asian session picks up.
• Upbeat sentiment, doubts over OPEC+ verdict favored oil buyers but firmer USD, EIA news probe advances.
• API Weekly Crude Oil Stock dropped more than -0.747M.
• EIA data, risk catalysts eyed, US inflation, China and Omicron are the key.

WTI crude oil prices ease from a weekly high to $71.50 after a two-day run-up, marking 0.40% intraday gains during early Wednesday morning in Asia. The black gold’s latest pullback part ways from the lesser-than-previous private oil stocks change figures from the American Petroleum Institute (API).

As per the latest API Weekly Crude Oil Stocks data for the period ended on December 03, the inventories shrank 3.089M versus the previous depletion of 0.747M.

The commodity prices jumped to more than a week’s high the previous day as the market’s risk appetite improved amid receding fears of the South African coronavirus variant, dubbed as Omicron. Adding to the market’s risk-on mood were hopes of China’s additional monetary policy easing after the People’s Bank of China’s (PBOC) Reserve Ratio Requirement (RRR) cut.

Furthermore, the US Energy Information Administration (EIA) energy demand forecast and firmer equities, not to forget the geopolitical tensions in the Middle East, could be cited as additional catalysts behind the commodity’s strength.

In the latest monthly Short-Term Energy Outlook (STEO) report, the EIA raised its forecast for 2022 world oil demand growth by 200K barrels per day (BPD) on Tuesday, and now demand growing 3.55M BPD YoY next year. The EIA STEO cut its forecast for 2021 world oil demand growth by 10K BPD to a 5.1M BPD YoY increase. Moving on, S&P 500 posted the biggest daily gains since March whereas Iran still refrains to abide by the nuclear deal.

Additionally, the US thinks over plans to manage the oil flows if Russia attacks Ukraine and the same fuel the oil prices. "The Biden administration is in 'intensive consultations' with the new German government over its response if Russia invades Ukraine and believes Germany would be ready to take significant action if Russia launches an attack, a senior U.S. State Department official said on Tuesday," per Reuters.

It’s worth noting, however, that the recently escalated tussles between the US and China join firmer US Treasury yields to challenge the oil prices.

Looking forward, weekly official oil inventory data from the US Energy Information Administration (EIA), -0.91M prior, will be important for fresh direction. Also on the radars will be macros from China and Omicron updates. However, more important will be Friday’s US Consumer Price Index (CPI) and the next week’s Fed meeting.

Technical analysis

A clear upside break of 200-DMA, around $70.00 by the press time, directs WTI crude oil prices towards a five-month-old horizontal resistance of around $74.80.