- WTI struggles to attract any follow-through buying amid mixed fundamental cues.
- Concerns about the worsening Middle East act as a tailwind for the black liquid.
- Signs of cooling fuel demand might hold back bulls from placing aggressive bets.
West Texas Intermediate (WTI) US crude Oil prices struggle to capitalize on the previous day's goodish bounce from the $84.00 mark, or over a one-week low and oscillate in a narrow band during the Asian session on Thursday. The commodity currently trades around the $85.75-$85.80 region and remains well supported by concerns about the worsening Middle East crisis.
Ceasefire talks between Israel and Hamas have yielded no agreement. Adding to this, a possible Iranian retaliation over a suspected Israeli strike on its embassy in Syria raises the risk that the Israel-Hamas war could escalate across the Middle East, putting the Oil supply at risk and acting as a tailwind for the black liquid, though a substantial rise in US Crude inventories cap the upside.
Official data published by the Energy Information Administration showed an estimated US Oil inventory build of 5.8 million barrels for the week to April 5, much more market expectations and a build of 3.2 million barrels for the previous week. Adding to this, an unexpected build in gasoline inventories pointed to signs of cooling in fuel demand, which, in turn, keeps a lid on Crude Oil prices.
Furthermore, the hotter US consumer inflation figures released on Wednesday forced investors to push back their expectations for the first interest rate cut by the Federal Reserve (Fed) to September from June. This, in turn, is expected to hamper economic activity and further dent fuel consumption, warranting some caution before positioning for any further appreciating move for Crude Oil prices.
Moving ahead, traders now look to the US economic docket – featuring the release of the usual Weekly Initial Jobless Claims and the Producer Price Index (PPI). This, along with speeches by influential FOMC members, should drive the USD demand and provide some impetus to the US Dollar-denominated commodities, including Crude Oil prices.
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