WTI regains poise, looks to $ 65 ahead of API report

• Approaches key 65 barrier amid escalating Libyan fighting, US sanctions and OPEC cuts.
•  Bullish US API supply report to trigger a fresh rally, but technicals point to overbought conditions?

Following a brief consolidative stint in the Asian trades, the bulls regained poise in the European session, now driving WTI (oil futures on NYMEX) to fresh five-month tops of 64.78, as the bulls target the 65 handle ahead of the US API fuel stocks data release.

Markets continue to cheer the increased prospects of tightening global markets amid supply threats emanating from the ongoing Libyan civil unrest, deeper OPEC output cuts and the US sanctions on Iran and Venezuela. It’s worth noting that OPEC member Libya pumps around 1.1 million barrels per day (bpd), just over 1% of global oil output.

Meanwhile, the persistent weakness seen around the US dollar amid weak US fundamentals and negative Treasury yields also remains supportive of the ongoing upsurge in the USD-sensitive oil.  The USD index trades -0.11% near daily lows of 96.87, having failed to resist above the 97 handle.

Looking ahead, it remains to be seen if the black gold can extend its bullish momentum above the 65 handle, as it appears overbought on the technical charts while a build in the US crude inventories could also limit further gains. The American Petroleum Institute (API) will publish its weekly crude supply report at 2030 GMT ahead of Wednesday's official figures.

WTI Technical Levels