WTI pares biggest daily losses in 10-weeks, focus on China inflation, Russia, Fed Minutes

• WTI picks up bids to reverse the previous day’s downside move.
• Market sentiment dwindles amid indecision over Russia-Ukraine conditions, ahead of key data/events.
• API inventory levels improved, EIA stockpiles also bear upbeat forecasts.
• China CPI, US Retail Sales and FOMC Minutes also decorate calendar.

WTI crude oil prices recover to $90.50 amid Wednesday’s Asian session, having witnessed the heaviest daily fall since early December 2021 the previous day.

The black gold dropped the previous day amid easing fears of an imminent war between Russia and Ukraine after headlines conveying the retreat of some troops from borders by Moscow. However, comments from Russian President Vladimir Putin and his US counterpart Joe Biden keep the geopolitical risk on the table and challenge the market’s optimism, despite getting lesser attention. That said, Russia’s Putin conveyed dissatisfaction with how negations are going over Ukraine’s NATO membership while US President Biden said, “Russian attack on Ukraine still very much a possibility.”

It’s worth noting that downbeat weekly inventory data from the American Petroleum Institute (API) also weighed on the commodity prices the previous day. As per the latest data, API Weekly Crude Oil Stock improved to -1.076M versus -2.025M prior during the week ended on February 11. It’s worth noting that the official stockpile figures by the US Energy Information Administration (EIA) are up for publishing at 15:30 GMT on Wednesday. Forecasts suggest the weekly inventories to ease from -4.756M to -1.769M.

Other than the Russian headlines and inventories, US Retails Sales for January and Federal Open Market Committee (FOMC) Minutes will also be watched closely amid chatters of 0.50% rate hike by the Fed. Recently, a Reuters poll said, “The US Federal Reserve will kick off its tightening cycle in March with a 25-basis-point interest rate rise, but a growing minority say it will opt for a more aggressive half-point move to tamp down inflation.”

That said, China’s headline inflation data for January, namely Consumer Price Index (CPI) and Producer Price Index (PPI), should also be watched carefully for immediate directions. Forecasts suggest the CPI will ease to 1.0% YoY from 1.5% whereas the PPI may drop to 9.5% versus 10.3% previous reading.

Technical analysis

WTI pulled back from a seven-month-old resistance line, around $93.80 by the press time, amid overbought RSI conditions. However, an upward sloping trend line from January 03 challenges the oil bears around the $90.00 threshold.