WTI consolidates recent gains around $115.00 amid pre-NFP anxiety

WTI crude oil adheres to profit-booking as it renews intraday low around $115.00, after rising the most in a week to poke $116.30 the previous day. While softer USD and no mercy for OPEC+ seemed to have triggered the black gold’s previous upside, mixed sentiment ahead of the US jobs report seem to weigh on the quote on early Friday.

In addition to the cautious optimism, mainly due to the softer early signals for today’s US employment numbers, the mixed headlines concerning China also weigh on the oil prices.

That said, comments from Deputy US Trade Representative (USTR) Sarah Bianchi seemed to have offered the latest entertainment to markets as the diplomat said, “USTR is seeking a 'strategic realignment' with China, tariff structure that 'makes sense'.” The positive mood, however, was challenged by statements like, “‘All options are on the table’ regarding tariff decisions on Chinese imports.”

On the other hand, US ADP Employment Change eased to 128K for May, versus 300K forecasts and a downwardly revised 202K previous reading. The Weekly US Initial Jobless Claims, on the other hand, dropped to 200K compared to 210K anticipated and 211K prior. Further, Nonfarm Productivity and Unit Labor Costs both improved in Q1, to -7.3% and 12.6% respectively, compared to -7.5% and 11.6% figures for market consensus. Furthermore, US Factory Orders for April softened to 0.3%, from a revised 1.8% in March and 0.7% forecast.

It should be noted that the oil ministers from OPEC+ nations agreed on Thursday to lift output by 648K barrels per day (BPD) in both July and August, versus 432BPD expected, according to sources speaking to Reuters. The reason for the energy benchmark’s previous jump, despite the hawkish verdict, could be linked to the market’s doubts over OPEC+ ability to deliver the output, as well as the “sell the rumor, buy the fact” attitude.

Also favoring the oil bulls was the weekly print of the weekly official oil inventory data, released from the Energy Information Administration (EIA), -5.068M versus -1.35M expected and -1.019M prior.

Looking forward, the monthly prints of the US employment data and ISM Services PMI for May will be crucial for markets. That said, the headline US NFP is expected to ease to 325K versus 428K prior whereas the ISM Services PMI may retreat from 57.1 to 56.4. Should the key data fail to please USD hawks, the WTI could recover.

Technical analysis

Multiple failures to stay beyond join the sluggish RSI to signals WTI pullback towards the mid-May top surrounding $113.20.