WTI clocks fresh 8-week highs, regains $ 71 ahead of API data

• Supply risks from Iran sanctions, steady Russian output and Gulf of Mexico underpin.
• Technical setup points to further upside bias, as a test of $ 71.50 looks inevitable.

Having witnessed a phase of bullish consolidation almost throughout the Asian trades, WTI (oil futures on NYMEX) broke to the upside and rallied nearly 2% to hit the highest levels since early July at $ 71.12.

The renewed buying seen around the black gold is mainly driven by the looming threats to oil supplies after two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane. 

Increased evidence of supply risks continues to push the oil prices northwards, as additional US sanctions on Iran begin to bite while stalled Russian output levels combined with dwindling supplies from Venezuela offer further support to the oil bulls.

However, it remains to be seen whether the barrel of WTI can sustain above the 71 handle amid a broadly firmer US dollar. A stronger US dollar makes the USD-denominated oil more expensive for the foreign buyers.

In the day ahead, markets look forward to the weekly fuel stocks data due to be published by the American Petroleum Institute (API) later a 2030 GMT for the next direction in oil.