- Crude oil extends gains on Wednesday at the start of the European session.
- API records fall in US crude inventories, signal an increase in energy demand.
- A moderate US dollar also supports oil prices.
Oil prices maintain their upward trend at the start of the European session on Wednesday. Optimism about global economic recovery raises energy demand, while the move is corroborated by the recent depreciation of the US dollar. At the time of writing, WTI is trading at $ 66.42, up 0.50% on the day.
A series of economic data concluded that domestic demand is increasing due to the reopening of economic activities in the region and it provided much needed support for black gold.
Data from the American Petroleum Institute (API) suggested that US inventories fell 7.7 million barrels in the week ending April 30. The fall in crude inventories in the world’s largest oil consumer indicates a strengthening demand outlook. The US, the Eurozone and the UK are experiencing a radical change in their economic activity backed by government spending and action.
In the meantime, OPEC and its members expect a reactivation of consumption in the second half of the year. In addition to the prospects for demand, the EU Commission plans to allow travelers who are fully vaccinated to travel within the EU.
In addition, the dollar-denominated commodity is enjoying a recent slowdown in the US dollar DXY index, which is consolidating gains near 91.30, suggesting investors are looking to riskier assets at the expense of the safe-haven US dollar.
However, the increase in corona cases in Asia-Pacific, especially in India, which is the third largest energy consumer, and Japan could limit earnings beyond $ 68.00.
Meanwhile, the dynamics around the US dollar will continue to influence oil prices.
WTI technical levels
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