WTI pares losses below $72.00 despite lesser-than-previous API inventory draw

WTI struggles to keep late Wednesday’s bounce off a three-week low around $71.70 amid the early Asian morning on Thursday. The energy benchmark’s latest bounce could be traced to the US dollar pullback and hopes of higher oil demand. In doing so, the black gold ignores weekly inventory data from industry sources, namely the American Petroleum Institute (API).

As per the latest API Weekly Crude Oil Stock data, the inventory draw was lesser than the previous 8.153M to 7.983 during the week ended on July 02.

Also negative for the oil prices could be the latest market fears over the coronavirus (COVID-19) variants. Recently, Atlanta Federal Reserve President Raphael Bostic said, per Reuters, “A new rise in coronavirus infections driven by the more virulent Delta variant could cause consumers to "pull back" and slow the US recovery.”

On the same line was the latest oil demand forecast per the Energy Information Administration (EIA), published Wednesday, that lowered forecast for 2021 world oil demand growth by 80,000 barrels per day (bpd) to an annual increase of 5.33 million bpd.

Above all, a pause in the US dollar run-up near the highest since early April and FOMC minutes’ suggesting fewer challenges to the easy money policies, at least for now, seem to favor the corrective pullback. Furthermore, indecision over OPEC+’s next move also backs the oil buyers.

Given the lack of major data in Asia, the oil prices may depend upon the risk catalysts and can continue the latest consolidation. However, the official inventory figures from the Energy Information Administration (EIA), expected -3.925M versus -6.718M, will be the key afterward.

Technical analysis

The first daily closing below 21-day SMA, around 72.55, directs WTI prices toward the $70.00 threshold. However, any further downside will be questioned by an ascending support line from November 2020, near $68.00, ahead of March’s top near $67.85.