WTI consolidates Fed, EIA stockpile-led rebound above $71.00 amid mixed mood
- WTI bulls take a breather following the heaviest daily jump in a week.
- Market sentiment dwindles as post-Fed reaction awaits ECB, PMIs.
- EIA stockpiles dropped double the expectations, Omicron concerns test the bulls.
WTI eases to $71.30, down 0.07% intraday while paring the biggest daily gain of the week during early Thursday.
The black gold’s latest pullback could be linked to the market’s cautious sentiment and mixed concerns ahead of the key central bank meetings and PMI release. That said, the previous day’s rebound could well be linked to the hawkish weekly inventory data from the US Energy Information Administration (EIA) and upbeat reaction to the Federal Reserve’s (Fed) faster tapering and higher dot-plot.
Worsening virus conditions in Europe and the UK join the extension of the cold war between the US and China to weigh on the oil prices of late. It’s worth noting that the US push for Uyghur Bill and Beijing’s rush to control data firms are the latest catalysts portraying the Sino-American tussle.
Cautious sentiment ahead of the European Central Bank (ECB) and the Bank of England (BOE) meeting, as well as the preliminary PMI for December, also weigh on the oil prices.
While portraying the mood, the US stock futures struggle for clear direction while the US 10-year Treasury yields seesaw after a two-day uptrend.
On Wednesday, the weekly prints of the EIA Crude Oil Stocks Change dropped more than double the -2.082M forecast to -4.584M for the period ended on December 10.
Talking about the Fed, the US central bank matched wide market forecasts of faster tapering and signals of the rate hike in 2022. However, the oil traders took it as a positive sign considering Fed Chair Jerome Powell’s comments like “the Omicron variant poses risks to the outlook”, as well as refrain from rate hikes until the tapering is completed.
Looking forward, WTI traders should pay attention to the risk catalysts for short-term direction.
Technical analysis
Unless providing a decisive break of either the 200-SMA level of $70.22 or the 100-SMA surrounding $73.75, WTI prices are likely to remain sidelined.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
