WTI flat-lines around mid-$83.00s, consolidates recent losses to over one week low

West Texas Intermediate (WTI) Crude Oil prices oscillate in a narrow trading band during the Asian session on Wednesday and consolidates the recent heavy losses to over a one-week low touched the previous day. The commodity currently trades just below mid-$83.00s, nearly unchanged for the day, and for now, seems to have stalled the recent sharp pullback from over a two-week high touched last Friday.

World leaders intensified efforts to contain the conflict between Israel and Hamas so that humanitarian aid could be delivered to the besieged Gaza Strip, easing concerns about potential supply disruptions. Apart from this, weak PMI data from the Euro Zone released on Tuesday revived recession fears, which is expected to dent fuel demand. This turns out to be a key factor acting as a headwind for WTI Crude Oil prices.

The flash US PMI prints, meanwhile, pointed to a still resilient economy and should allow the Federal Reserve (Fed) to stick to its hawkish stance to combat inflation, adding to worries about economic headwinds stemming from rising borrowing costs. That said, indications of strong fuel demand in the United States (US), even after the end of the summer season, and tightening global supplies help limit losses for Crude Oil prices.

In fact, data from the American Petroleum Institute (API) showed that US inventories shrank more than 2 million barrels (mb) in the week to October 20. This comes ahead of the official report by the Energy Information Administration, which is due later during the US session on Wednesday and should provide a fresh impetus to Oil prices. The fundamental backdrop, meanwhile, seems tilted firmly in favour of bearish traders.

Technical levels to watch