Oil gears up for squeeze higher after G20

• Oil (WTI) pops higher and flirts with a break of $88.
• The US Dollar storms out the gates stronger on Tuesday after a lacklustre performance on Monday.
• The American Petroleum Institute will release its weekly Crude Oil numbers on Tuesday. 

Oil prices are trending higher again after the G20 meeting from last weekend. The event saw no meetings taking place between US president Joe Biden and Crown Prince Mohammad bin Salman al-Saoed of Saudi Arabia. With China and Russia absent as well from the gathering, it appears that the US is unable to strengthen ties with the Middle-Eastern oil producing countries and could start a tit-for-tat politics game with OPEC+ on the current elevated US oil prices and expected supply cuts. 

Meanwhile, the US Dollar is roaring back on Tuesday, erasing its losses from Monday when China tripped the Greenback by a staggering strong fixing of its Yuan. The Greenback lost substantially against the Japanese Yen and Australian Dollar as well in the fallout of that strong Yuan fixing against the US Dollar. At the time of writing, the US Dollar Index (DXY) had nearly pared back all losses from Monday and was trading almost flat for the week. 

At the time of writing, Crude Oil (WTI) price trades at $87.33 per barrel and Brent Oil at $90.78

Oil news and market movers

• With the US Inflation report due on Wednesday, the current rise in gasoline prices might amount to a surge in inflation pressure. 
• US Baker/Hughes Rig Count on Friday revealed that the number of oil producing rigs was still at a yearly low. This means that the US needs to resupply current drawdowns by buying externally. This means that the demand side will see the US quite active in buying on the global oil markets.
• In the first week of September, land crude oil storage levels in US, Japan and the Amsterdam-Rotterdam-Antwerp oil trading hubs fell 2.8% to 546.1 million barrels.
• When including global floating crude stockpiles from September, total crude oil inventories decreased by 2.4% to 631m bbl. So inventories are getting crushed by drawdowns, which need to be refilled or replaced at one point in time.
• The American Petroleum Institute will publish at 20:30 GMT its weekly Crude Oil stock numbers. Previous reading was a drawdown of 5.521 million barrels. 
• Equity markets are in the red on Monday with no real outliers to mention as markets are searching for direction.

Oil Technical Analysis: Breakout due

Oil prices are undergoing a squeeze to the upside with higher lows and a flat top near $87.50. It is just a matter of time for that cap on the topside to break. Expect to see a possible quick sprint higher should the API numbers this evening point to another massive drawdown in stockpile numbers. 

On the upside, $88 as a big figure is the first nearby hurdle to head to. From there, it will be a tiered rally toward first $90 and finally $93.12, the double top from October-November last year. That means a 5% uptick move is possible in the nearby future. 

On the downside, a pivotal level is being identified at $84.30, the high of August 10. In case that level does not hold, a substantial nosedive might occur. That means that oil prices might drop all the way to that important floor near $78 identified. 

WTI US OIL daily chart