WTI remains depressed below $40.00 as traders await fresh clues
- WTI extends the previous day’s U-turn from $40.59.
- Upbeat PMI data, EIA inventory draw fail to underpin the oil prices.
- Risk-tone also struggles for a clear direction despite escalate US-China tension and virus woes.
- US NFP will decorate the economic calendar, qualitative catalysts to offer additional direction.
WTI remains soft around $39.64, down 0.25% on a day, during the early Asian session on Thursday. The energy benchmark took a U-turn from a one-week top while keeping the latest fashion of a marking a daily close below $40.00 since June 23.
The energy benchmark defied large draw in the US oil stockpiles, as per the Energy Information Administration (EIA). Data concerning the US Crude Oil Stocks Change for the week ending on June 26 suggested on Wednesday that the commercial inventories dropped by 7.2 million barrels versus the forecast of -0.71 million barrels and +1.442M prior.
Other than the upbeat inventories, better than forecast activity numbers from China, the US and the Eurozone also suggested a further upside of the black gold. Furthermore, the soft US dollar offered an additional reason for the energy bulls to remain optimistic.
However, nothing from the above could defy the traders’ fears of the speedily spreading coronavirus (COVID-19) in the US. Also exerting downside pressure on the quote could be the likely dent to the energy demand based on the Sino-American and India-China tension. It’s worth mentioning that the US-Iran tussle also fell short of supporting the crude oil prices.
Given the traders’ fear of reacting positively to the upbeat data/news, market players might await the key US employment figures for June before forecasting near-term moves. Forecasts suggest the headline Nonfarm Payrolls (NFP) rise from 2,509K prior to 3,000K while Unemployment Rate mat recedes from 13.3% to 12.3%. Considering the optimism surrounding the recovery in the American jobs report, coupled with the oil traders’ fears, any disappointment will exert additional downside pressure on the black gold prices.
Technical analysis
Wednesday’s bearish spinning top suggests the oil traders’ indecision, which in-turn might offer short-term pullback in the quote. However, the bears will be serious if the WTI prices slip below $38.00 comprising 21-day EMA and a five-week-old ascending trend line.
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.
