WTI: On a steady recovery above $ 56 mark, will it last?

• Middle East tensions, fall in US crude stockpiles underpin oil’s recovery.
• Further upside in oil appears capped amid broad USD strength, global growth concerns.

WTI (futures on Nymex) is seen consolidating the recent recovery to near 56.30 region, as the bulls take a breather before the next push higher.

The black gold found some reprieve from the ongoing Middle East tensions and a drop in the US crude stockpiles, following a sharp drop witnessed in the US last session, triggered by resurfacing global economic slowdown concerns and its impact on fuel demand. Markets were spooked by weak manufacturing PMI reports on both sides of Atlantic, released on Wednesday.

The crude stocks data published by both the Energy Information Administration (EIA) and the American Petroleum Institute (API) reported a bigger-than-expected drawdown in the crude inventories.

Focus on Middle East tensions

On the Gulf crisis- front, an adviser to Iran’s supreme leader was quoted, as saying that any change in the status of the Strait of Hormuz, which Tehran says it protects, would open the door to a dangerous confrontation, as cited by Reuters.

Attention now turns towards the ECB decision and critical US macro data for fresh dollar trades, in order to gauge its impact on the USD-sensitive oil. Meanwhile, markets digest the latest headlines reported by Tasnim, citing that Iran has begun legal effort to free the UK seized tanker.

WTI Levels to watch