- The oil price is marching towards $73.00 as hawkish Fed bets have slimmed vigorously.
- Weak China’s Trade Balance data failed to restrict the upside in the oil price.
- The discussions between US Blinken and Saudi Arabia’s Price, and US EIA inventory data will remain in focus.
West Texas Intermediate (WTI), futures on NYMEX, are looking to extend their recovery towards the crucial resistance of $73.00 in the early American session. The oil price showed a solid recovery amid a sell-off in the US Dollar Index (DXY) and deepening hopes of a steady interest rate policy announcement by the Federal Reserve (Fed).
In the Asian session, oil bears were heated after the release of weak China’s Trade Balance (May) data. In US Dollar terms, Trade Balance data dropped sharply to $65.81B vs. the estimates of $92B and the former release of $90.21B. Exports were sharply contracted by 7.5% while the street was estimated a marginal contraction of 0.4%.
The likes for Chinese products are getting wane and buyers are shifting to other countries for outsourced manufacturing. It is worth noting that China is the largest importer of oil in the world and weak economic prospects in China mean a filthy demand for oil.
The US Dollar Index (DXY) has sensed selling pressure after a minor pullback move to near 104.00. Rising bets for a neutral interest rate policy by the Fed are weighing significant pressure on the USD Index. Meanwhile, the US Goods and Trade Balance deficit has grown to $74.6B, lower than the estimates of $75.2B.
Going forward, oil inventory data for the week ending June 02, reported by the United States Energy Information Administration (EIA) will be keenly watched. Apart from that, investors will keep focusing on the discussions between US Secretary of State Antony Blinken and Saudi Arabia’s Price Mohammed bin Salman Al Saud.
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