WTI extends gains after API reports larger-than-expected draw in crude stocks

• WTI advances to weekly high at $57.80 post-API report.
• Crude inventories fell by 5.2 million barrels for the week ending December 15.

Crude oil prices extended their upside in the late post-settlement trade after the API's weekly report revealed a larger-than-expected draw in crude oil inventories in the United States. As of writing, the barrel of West Texas Intermediate was trading at $57.70, up 0.8% on the day.

In its weekly report, the American Petroleum Institute announced that crude inventories decreased by 5.2 million barrels for the week ending December 15 to 438.7 million, surpassing the market's estimate of a fall of 3.8 million barrels.Further details of the report showed that refinery crude runs dropped by 106,000 barrels per day while gasoline stocks increased by 2 million barrels.

On Tuesday, the broad-based USD weakness provided an additional boost to the WTI. After failing to hold above the 94 mark, the US Dollar Index extended its corrective slide for the second day in a row and was last seen at 93.05, down 0.2% on the day.

On Wednesday, the Energy Information Administration (EIA) is going to release its weekly inventory data, which is expected to show a decrease of 3.518 million barrels. However, investors are likely to pay more attention to the changes in the oil output in the U.S. A rising shale production in the U.S. could continue to limit crude oil's upside.

Technical outlook

The barrel of WTI could encounter the initial hurdle at $58.55 (Dec. 12 high) ahead of $59.05 (Nov. 24 high) and $60 (psychological level). On the downside, supports align at $57.20 (daily low), $56.10 (Dec. 14 low) and $55 (psychological level).