WTI defends $68.00 despite softer API inventory draw, EIA stockpiles eyed
- WTI holds onto the bounce off three-week low inside a choppy range.
- API Weekly Crude Oil Stock came in softer-than-previous for seven days to August 06.
- US stimulus passage, profit booking near multi-day low adds to the recent upside.
- Sentiment-related headlines, US CPI and EIA inventories will be the key.
WTI remains sidelined around $68.30, after a stellar rebound from a multi-day low, amid an initial Asian session on Wednesday. In doing so, the oil benchmark pays little heed to the private oil inventory data from the American Petroleum Institute (API). The reason could also be linked to the mixed catalysts of late.
API Weekly Crude Oil Stock for the period ended on August 06 dropped 0.816 million barrels versus the previous draw of 0.879 million barrels.
The passage of the US President Joe Biden backed a $1.2 trillion infrastructures spending plan by the Senators, with 69-30 votes, recall oil bulls that earlier stepped back on concerns that the virus woes may fade recovery and energy demand. Also helping the black gold buyers were expectations that the geopolitical rift between the West and the Middle East, as well as between Taliban and Afghan authorities, can extend. On the same line were the US-North Korea tensions due to the recent findings from the United Nations suggesting that the hermit kingdom is secretly extending nuclear research.
Alternatively, escalating covid woes in the West, as well as Asia-Pacific, challenge the energy demand and put downward pressure on the commodities. Also on the same side could be the firmer US dollar and concerns over the Fed’s tapering.
Amid these plays, US 10-year Treasury yields print five-day uptrend to monthly high whereas the US Dollar Index (DXY) also poke July’s top, also the highest since April.
As the bulls and bears jostle over mixed concerns, the official oil inventory data from the US Energy Information Administration (EIA) for the week ended on August 06 and Consumer Price Index (CPI) details for July will be the key to watch. EIA stockpiles are likely to drop 1.05 million barrels versus the previous addition of 3.626 million barrels whereas the US CPI is expected to ease from 0.9% MoM to 0.5%.
Technical analysis
Unless crossing the early July’s low near $70.30, the double-bottom level surrounding $65.00 should be observed closely.
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.
