WTI buyers attack $42.00 amid geopolitical fears, API data eyed

• WTI consolidates near a three-day high while aiming for $42.00.
• Blasts in Iraq, North Korean leader praise nuclear arsenal and increasing US aerial surveillance over the South China Sea gain attention.
• US dollar weakness adds to the upside catalysts but fears of increasing inventories keep bulls chained.
• API data, risk catalysts will be followed for fresh impulse.

WTI prints 0.30% gains while picking up the bids near $41.85 amid the early Asian session on Tuesday. The black gold recently benefited from fears of an escalation in the global geopolitical tension. Though, fears that the US stockpiles can keep increasing weigh on the quote.

Two separate rocket attacks have recently been reported in Iraq. Among them, one blasted near Taji military base whereas the other shook the north of the Arab nation around Tikrit. While these blasts have been in fashion off-late, the challenges they offer to the smooth functioning of oil markets please the bulls.

Also adding to the geopolitical tension are the North Korean Leader Kim Jong-Un’s favor for the nuclear arsenal, despite global ire, as well as the Trump administration’s sending of more planes to keep watch on China, as per The Times.

It should also be noted that the US dollar weakness adds to the buyers’ optimism since the commodity has an inverse relation with the greenback. The US dollar index (DXY) dropped to the lowest since June 2018, to 93.47, currently around 93.65, on Monday.

On the contrary, fears of slowing demand, due to the coronavirus (COVID-19) woes and a sustained increase in inventories keep the energy traders cautious. As a result, today’s private stockpile data from the American Petroleum Institute (API), prior  7.544M, becomes the key to watch.

Technical analysis

Other than the $42.00, a week-long falling trend line, at $42.20 now, adds to the upside barriers toward the monthly high of $42.52 and February month’s low near $44.00. Meanwhile, 21-day SMA near $40.80/75 offers immediate key support to the oil benchmark.