Brent oil backs off from daily highs, eyes US supply data

Brent prices rallied to a session high of $38.80 before it trimmed gains to trade around $38.55 levels.

Hope of bullish supply data supporting prices

Markets expect Energy Information Administration to show a drawdown/lesser-than-expected build in inventories, especially since the American Petroleum Institute released yesterday showed oil inventories in the US fell by 4.3 million barrels in the week ended April 1. Traders were expecting an increase of 2.9 million barrels.

Still, the bullish momentum struggled as prices closed-on $39 handle as markets worry about falling prospect of OPEC and non-OPEC production freeze strategy.

Brent Technical Levels

The immediate hurdle is noted at $39.05 (head and shoulder neckline) above which prices could test $40.05 (rising trend line hurdle). On the other hand, a break below $38.32 (daily low) would expose $37.24 (previous day’s low).