WTI consolidates the recovery around $71.50 ahead of EIA, Fed

• WTI is clinging onto recovery gains amid risk-on-market mood, subdued DXY.
• API US supplies fell by 6.1 million barrels last week, Evergrande fears ebb.
• Focus remains on the Fed decision, Evergrande updates and EIA data.

WTI (NYMEX futures) has entered a phase of upside consolidation around $71.50 on Wednesday after staging an impressive recovery from six-day lows of $69.67 reached a day before.

WTI cheers API stocks draw, risk-on mood

At the time of writing, WTI is trading $71.58, up 1.55% on the day, underpinned by the upbeat market mood, courtesy of easing fears over a default by China’s Evergrande, especially after the company announced that its main unit will make the repayment on Thursday.

Additionally reports that the Chinese government could take over control of Evergrande in an imminent restructuring also buoy the risk sentiment, aiding the recovery in the higher-yielding oil.

Further, the return of risk appetite dulls the US dollar’s safe-haven allure, benefiting the USD-denominated WTI prices. Markets also remain defensive on the greenback ahead of the Fed monetary policy decision, with a tapering announcement widely anticipated.

On the fundamental front, a sharp drawdown in the US weekly crude stockpiles, as per the American Petroleum Institute’s (API) report published late Tuesday, also collaborates with the bullish undertone in the black gold.

The latest API data showed that the US crude supplies fell by 6.1 million barrels for the week ended September 17. Attention now turns towards the Energy Information Administration (EIA) weekly crude stocks change data and the Fed verdict for fresh trading impulse.

WTI technical levels to consider