- WTI bulls take a breather at the weekly top after rising the most in a month.
- Softer US Dollar, risk-on mood and firmer China data allow Oil buyers to stay hopeful.
- Surprise building in EIA inventories, hopes of no OPEC+ supply cuts prods Oil buyers.
- US NFP, risk catalysts eyed for clear directions, USD moves are the key.
WTI crude oil fades upside momentum around $70.00 during early Friday in Asia, after rising the most in one month the previous day. In doing so, the Oil price portrays the typical pre-NFP positioning of the markets while also justifying the price-negative catalysts from the energy industry. However, risk-on mood, softer US Dollar and expectations of the delay in the Fed rate hike seem putting a floor under the Oil price.
The US Dollar weakness is the biggest catalyst to favor the Oil buyers. That said, US Dollar Index (DXY) seesaws around 103.56 after a 0.65% daily fall marked on Thursday, the most in a month, to reverse from the highest levels since mid-March.
That said, the United States Treasury bond yields also refreshed the weekly lows as the market’s pricing of the Fed rate hike dropped. Adding strength to the DXY could be mixed US data and receding hopes of a faster Fed rate hike, as well as firmer data from China and passage of the US debt ceiling agreement in the US House of Representatives.
Elsewhere, a surprise build in the weekly inventories reported by the US Energy Information Administration (EIA), 4.488M for the week ended on May 26, versus -1.386M expected and -12.456M prior, weigh on the Oil prices.
On the same line are the concerns that the Organization of the Petroleum Exporting Countries and allies led by Russia, known as the OPEC+, are unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward $70 per barrel, four sources from the alliance told Reuters.
Amid these plays, the Oil buyers are likely to wait for more clues to witness further upside.
Looking forward, developments surrounding the US bill to avoid default may entertain the Oil traders ahead of the US jobs report for May. forecasts surrounding the US Nonfarm Payrolls (NFP) to ease to 190K from 253K prior while the Unemployment Rate is also expected to increase to 3.5% from 3.4%.
Technical analysis
Unless crossing a descending resistance line from April 12, around $72.65 by the press time, WTI remains off the buyer’s table.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trims gains, back below 1.1300
EUR/USD gained bullish traction on Monday, climbing above the 1.1300 mark as the US Dollar came under sustained selling pressure. The move followed Moody’s downgrade of the US sovereign credit rating, which added to the pair’s upside momentum.
GBP/USD sticks to daily gains around 1.3360
GBP/USD extended its rally on Monday, briefly surpassing the 1.3400 mark on the back of renewed weakness in the Greenback, which was particulalry exacerbated following Moody’s decision to downgrade the US credit rating by one notch.
Gold meets daily resistance around $3,250
Gold regained momentum on Monday, climbing toward the $3,250 mark per troy ounce in response to a cautious market tone. In fact, investors sought safe-haven assets in response to Moody’s downgrade of the US government’s credit rating and renewed trade concerns.
Stock futures contract after Moody's US debt downgrade Premium
US stocks opened on a sour note on Monday following the fallout late Friday when the Moody's credit rating agency lowered its outlook on US debt from Aaa to Aa1. Moody's had already had the US government on watch for a year and half, so the actual downgrade shouldn't have surprised investors too much.
China April slowdown shows the impact of economic uncertainty
Trade war uncertainty is denting Chinese confidence, resulting in slower economic activity in April. Retail sales and fixed-asset investment both underperformed forecasts amid heightened caution. Yet the impact on manufacturing was less than feared.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.