WTI fades pullback from one-month low, prints three-day losing streak above $41.00
- WTI stays on the back foot after failing to extend the bounce off $40.44.
- US dollar strength dims market impact of Iraq’s U-turn over OPEC+ output cut accord.
- US NFP, Baker Hughes Oil Rig Count will be important for fresh impetus.
WTI fizzles upside momentum from a multi-day low flashed the previous day while declining to $41.28, down 0.40% on a day, during the Asian session on Friday. The energy benchmark slumped to the lowest since August 04 the previous day as the US dollar flashed a three-day winning streak following its U-turn from a 28-month low.
In doing so, the black gold ignores Iraq’s denial that it was seeking exemption from the OPEC and its allies (OPEC+) output cut deal while adding that it remained fully committed to the agreement, per Reuters. Also forgotten were the latest weekly inventory data from the US American Petroleum Institute (API) and the official Energy Information Administration (EIA) update.
The US dollar index (DXY) seems to cheer the market’s optimism concerning the coronavirus (COVID-19) vaccine and recently positive data from the world’s largest economy. In doing so, the US currency also exerts downside pressure on the commodities due to its inverse relationship.
Other than the vaccine hopes and positive data, expectations that the US policymakers may soon deliver the much-awaited stimulus also favor the DXY. Latest update suggests that the House Speak Nancy Pelosi and Treasury Secretary Steve Mnuchin agreed over the stop-gap funding before the current bill expires on September 30.
Looking forward, traders will keep eyes on the August month employment data from the US ahead of waiting for the weekly Baker Hughes US Oil Rig Count. Market consensus questions the US dollar’s sustained strength amid the anticipated declines in the headline Nonfarm Payrolls and Average Hourly Earnings. Though, likely weakness in the Unemployment Rate of 10.2% to 9.8% may cut the greenback losses and can keep the barrel of commodity heavy.
Technical analysis
Although sustained trading below the 200-day EMA level of $41.87 favors the sellers, a daily closing below 50-day EMA, at $41.00 now, becomes necessary to witness further declines of the WTI.
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.
