WTI crude oil struggles near $72.00 as Saudi Arabia-led upside fades amid downbeat US data, mixed sentiment

WTI crude oil treads water around $72.00, defensive after reversing the week-start gains, as energy traders seek fresh clues amid Tuesday’s sluggish Asian session. In doing so, the black gold bears the burden of the downbeat US activity data while teasing sellers ahead of the private Oil inventory report.

WTI crude oil marked a week-start gap towards the north as Saudi Arabia copied central bankers’ style to defend the energy price and showed readiness to do “Whatever it takes” to cut the output. On the same line was the weekend upbeat from the Organization of the Petroleum Exporting Countries and allies led by Russia, collectively known as OPEC+, as they agreed on a new output target of 40.46 million barrels per day (mb/d) from 2024.

On the contrary, the US ISM Services PMI declined to 50.3 for May versus 51.5 expected and 51.9 prior whereas growth of the Factory Orders also deteriorated during the stated month to 0.4% versus 0.5% market forecasts and 0.9% previous readings. It should be noted that the final readings of S&P Global Composite PMI and Services PMI also marked softer figures for May.

The downbeat US activity data contrasts with the upbeat China Caixin Services PMI and raise fears of a cut in Oil demand from one of the world’s biggest energy consumers.

It’s worth noting that International Monetary Fund (IMF) Managing Director Kristalina Georgieva suggested during the weekend that the Fed needs to do more to tame inflation. The same joined concerns about the need for the US large banks to hold more capital to battle the landing crisis and weigh on the sentiment amid a sluggish session.

While portraying the mood, S&P500 Futures print mild losses whereas the US Treasury bond yields and the US Dollar Index (DXY) remain pressured by the press time.

Moving on, the weekly industry inventory report for the black gold, namely from the American Petroleum Institute (API) will be crucial for clear directions amid a light calendar elsewhere. With this, major attention will be given to the risk catalysts.

Technical analysis

Failure to provide a daily closing beyond the 50-day Exponential Moving Average (EMA), around $73.50 by the press time, directs WTI Crude Oil bears toward the $70.00 round figure.