WTI remains pressured towards $72.00, China GDP eyed
- WTI stays depressed after posting the heaviest daily losses in over a week.
- EIA inventories depleted more than expected, US dollar weakened.
- Covid woes, reflation fears and Saudi-UAE deal weigh on energy prices.
- Risk catalysts, DXY moves become the key to fresh impulse.
WTI oil prices keep the previous day’s downbeat performance, sluggish of late, near $72.30 during the early Asian session on Thursday. The energy benchmark could neither cheer stockpile draw nor weak US dollar as news of a deal between Saudi Arabia and the UAE over production weighed on the black gold.
Reuters cites an anonymous source to say "UAE will have a higher oil production baseline at 3.65 million barrels per day for future oil deals." The output compromise between Saudi Arabia and the UAE (United Arab Emirates) removes short-term uncertainty over the OPEC+ production moves that recently propelled oil prices. Additionally, the coronavirus (COVID-19) variant woes and the uncertainty over US President Joe Biden’s stimulus add to the oil price weakness.
Hence, the WTI crude oil prices ignore higher than expected 4.359M draw of the stockpile, not to forget -6.866M prior, to -7.890M as per the Energy Information Administration’s (EIA) weekly Crude Oil Stocks Change for the period ended on July 09.
It’s worth noting that the commodity also failed to cheer the US dollar weakness, on the back of Federal Reserve Chairman Jerome Powell’s dovish comments suggesting that a “lots of notice” would be given before adjusting the monetary policy in his bi-annual testimony.
Amid these plays, US stock futures struggle for a clear direction following the mixed closing of the Wall Street benchmarks. Further, the US Treasury yields also take a breather following the heaviest drop in a week.
Looking forward, China’s second-quarter (Q2) GDP, expected 1.2% QoQ versus 0.6% prior, will be the key as any deterioration in the output of the world’s biggest oil consumer could extend WTI’s latest weakness. Also crucial will be to observe the US dollar moves amid a light calendar in the US session.
Technical analysis
A daily closing below 21-DMA, around $73.15, directs WTI sellers toward a three-week-old rising trend line near $71.60.
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.
