WTI: A phase of bullish consolidation ahead of Fed

Oil futures on NYMEX staged a solid comeback from four-month troughs struck just ahead of $ 47 mark and peaked at $ 48.85 in Asia opening trades, before entering into an upside consolidative mode, which extends into Europe.

The black gold paused six consecutive days of declines and rebounded this Wednesday on upbeat fundamentals, after the US API weekly crude stockpiles report showed an unexpected drawdown in the inventories last week. The US crude stocks fell by 531k barrels, against expectations of an increase of 3.7 million barrels.

Moreover, Goldman Sachs optimistic remarks on OPEC's compliance with output deal, also added to the renewed upside in oil prices. Goldman Sachs’ analysts noted, “Our expectations that inventories will draw through 2017 therefore leads us to expect that Brent time spreads will continue to strengthen with the forward curve in backwardation by 3Q17."

All eyes now remain on the official US government report on the crude inventories, as published by the EIA, ahead of the highly influential FOMC verdict, which will also have a significant impact on the USD-sensitive oil.

WTI technical levels        

A break above $ 48.85/95 (previous high/ 200-DMA) could yield a test of $ 50/50.3 (psychological levels/ 10-DMA), beyond which $ 50.35/50 (classic R3) could be tested. While a breach of support at $ 48 (round number) would expose the 4-month lows of $ 47.09, below which downside opens up for a test of $ 46.17 (classic S2/ Fib S3)