WTI falls to three-week lows below $ 71.00 ahead of EIA data

• WTI extends the correction, while maintaining risk aversion.
• WTI falls below $ 71.00 and ignores API’s bullish crude inventory data.
• The focus is on weekly US crude reserves from the EIA.

The WTI (Nymex futures) has broken down its bearish consolidation phase during the European session on Thursday, reaching the lowest levels since June 18 at $ 70.78. At time of writing, WTI crude is recovering slightly to the $ 71.12 level, still losing -0.75% on the day.

The correction from the highest levels since November 2014 at $ 76.98 reached on Tuesday remains unabated as sellers remain in control amid a growing aversion to risk in financial markets, fueled mainly by renewed concerns about the resurgence of coronavirus cases worldwide, with the Asia-Pacific region being the most affected.

Investors remain suspicious of the new wave of covid and its impact on the global economic recovery, which puts at risk the growth prospects for oil demand. Falling Treasury yields and US equity futures show signs of a shift in risk sentiment toward safe-haven assets like gold and the yen at the expense of higher-yielding assets like oil.

Amid risk aversion sentiment, WTI ignores the reduction in weekly crude stocks in the United States, the American Petroleum Institute (API) reported late on Wednesday. API data showed that US crude inventories fell by 7.98 million barrels last week.

The focus is now on the official US government crude inventory data that the Energy Information Administration (EIA) will release on Thursday for new short-term business opportunities in oil.

WTI technical levels to consider