During Tuesday’s Asian trading session, WTI crude oil succeeded in extending its previous US session gains and took modest bids around $37.20, mainly due to the risk-on market sentiment triggered by the multiple factors. On the other hand, the fears of the increasing number of COVID-19 cases turned out to be one of the key factors that kept a lid on any additional gains in crude oil. At press time, WTI crude oil is currently trading at 37.20 and consolidating in the range between 36.38 and 37.44.

However, traders are cautious about placing any strong position ahead of the US weekly crude stockpile data, which will be released by the American Petroleum Institute (API) later today at 20:30 GMT. At the USD front, the broad-based US dollar took offers on the day mainly after the Federal Reserve’s announcement that it would start purchasing a more diverse range of investment-grade US corporate bonds which initially boosted the risk-on market sentiment and kept oil prices higher as the price of oil is inversely related to the price of the US dollar.

However, investors turned fearless as the Federal Reserve is expected to secure companies’ access to cash as well as ensure credit market liquidity due to the economic impacts of the COVID-19 virus. Whereas, the US Dollar Index that tracks the greenback against a basket of other currencies slipped 0.23% to 96.425 by 11:40 PM ET (4:40 AM GMT).

Moreover, the reason for the risk-on market sentiment could be attributed to the fresh optimism over US Secretary of State Mike Pompeo deciding to meet with the Chinese delegation at a US military base in Hawaii during this week to discuss two-sided relations that have been affected deeply since the start of the year.

However, the latest statement by the White House Adviser Larry Kudlow suggested that 2021 could be a developing year, wherein we could see a V-shaped recovery. In the meantime, he also added that there is no intention of even thinking about a second shutdown, which also boosted the risk-on market sentiment and contributed to crude oil’s gains.

Daily Support and Resistance

S1 30.52

S2 33.59

S3 35.65

Pivot Point 36.67

R1 38.72

R2 39.75

R3 42.83

WTI crude oil is gaining support above 36.77 level. Above this level, WTI has odds of bullish trend continuation, which can lead crude oil prices higher until 38 and 39.35 level. While the bearish breakout of 36 levels can extend to selling until 34.63 level. On the lower side, violation of 34.63 can cause a drop until 32.90 today.

Good luck!