WTI crude oil steadies below $71.00 as markets stabilize after volatile Thursday

• WTI retreats from one-week high amid mixed catalysts from US, China.
• Oil buyers reassess demand signals from China, EIA forecasts amid hawkish central banks.
• Risk catalysts, mid-tier US data should be watched closely for fresh impulses in energy market.

WTI crude oil clings to mild losses around $70.70 as energy traders take a breather after a volatile Thursday. That said, the black gold refreshed weekly top the previous day, backed by the broad US Dollar weakness and the market’s risk-on mood, before retreating amid early Friday.

On Thursday, Reuters came out with the news suggesting China's oil refinery throughput rose 15.4% in May from a year earlier, hitting its second-highest total on record. The same hints at more energy demand from the world’s biggest commodity user and joined the US Dollar weakness to propel Oil prices.

Also favoring the WTI bulls could be the upbeat EIA forecasts and the People’s Bank of China (PBoC) rate cut. That said, the International Energy Agency (IEA) said on Wednesday that “global oil demand will grow by 2.4 million bpd this year, to a record 102.3 million bpd.” On the other hand, the PBoC cut its one-year interest rate for the first time in 10 months, by 10 basis points (bps).

Elsewhere, mostly downbeat US data, despite firmer Retail Sales growth, joined the European Central Bank’s (ECB) hawkish moves to weigh on the US Dollar Index (DXY) by making it drop the most in more than three months. That said, the DXY dropped the most since early March the previous day while poking the lowest levels since May 12, to 102.15 at the latest.

It should be noted that the upbeat performance of Wall Street, softer yields and the market’s unconvincing bets on the Fed’s July rate hike, per the CME’s FedWatch Tool, also propel the WTI crude oil price.

Alternatively, downbeat prints of China’s Retail Sales and Industrial Production join the market’s latest consolidation to prod the energy bulls.

To overcome the latest inaction, WTI traders should keep their eyes on the risk catalysts and the preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June and five-year inflation expectations for clear directions.

Technical analysis

Failure to provide a daily closing beyond the 21-DMA and a fortnight-old descending resistance line, around $71.15 and $71.30 in that order by the press time, triggers the WTI crude oil’s pullback moves.