WTI rebounds in tandem with risk sentiment, eyes on $39 mark

• WTI bounces, taking cues from a shift in the risk tone in Europe.
• Markets still pinned economic optimism, as virus fears weigh.
• OPEC+ compliance in June likely to be higher than May's.

WTI (August futures on Nymex) recovers almost $1 from daily lows of 37.52 in Europe, as markets still remain pinned on hopes of a global economic recovery despite the growing fears over second-wave of coronavirus worldwide.

The shift in the risk sentiment is reflective of the minor bounce in the European equities and US stock futures, which in turn favors the higher-yielding oil. At the press time, the US oil trades modestly flat at daily highs near 38.50.

Meanwhile, the report of China advancing on its new vaccine for corona cure and a rebound in the country’s industrial profits also remain supportive of the risk assets. Broad-based US dollar weakness amid an improved market mood also collaborates with the uptick in the USD-denominated oil. The US dollar index is down 0.25% to trade around 97.20 levels.

Despite the latest leg higher, the further upside in the barrel of WTI remains at the mercy of the broader market sentiment, in the face of the virus surge. Markets also digest the reports from Energy Intelligence, citing that the “OPEC+ compliance in June is also expected to be higher than May, mainly because Saudi Arabia, the UAE, Kuwait and Oman are cutting above their quotas.”

WTI technical levels to watch

With the bulls back in control, the next resistances are aligned at 38.90 (10-DMA) and 39.35 (June 26 high). On the flip side, the immediate downside remains capped by the daily pivot point at 37.88, below which the daily low of 37.52 could be tested.

WTI additional levels