WTI seesaws around $71.00 as coronavirus concerns battle stimulus hopes

WTI licks its wounds around $71.00, down 0.05% intraday around $71.15 during Tuesday’s Asian session. The oil benchmark marked the biggest daily losses in two weeks the previous day, amid the virus-influenced economic concerns, before the latest stimulus optimism offers a breathing space to the traders.

July’s activity numbers from the world’s top two economies, namely the US and China, came out disappointing and raised questions over the recovery moves from the pandemic. While Beijing’s official gauge marked the slowest expansion in 17 months, followed by downbeat Caixin Manufacturing PMI, the US ISM Manufacturing PMI eased below forecast and prior readouts to 59.5 during the stated period.

In addition to the PMI numbers, comments from the US Centers for Disease Control and Prevention (CDC) also amplified the covid woes. Reuters quoted an internal report, made public on Friday, to highlight the Delta variant of the virus as “likely more severe” than earlier versions. Also portraying the virus fears was the reintroduction of the local lockdowns in China and Aussie hardships due to the COVID-19.

As a help, the International Monetary Fund (IMF) announced the historical allocation of $650 billion to its Special Drawing Rights (SDRs) during late Monday. Additionally, the US policymakers are also hopeful of getting the much-awaited stimulus passed during this week.

It’s worth noting that the escalating tussles between the US and Iran, as well as China’s support to Taliban-led governance in Afghanistan after American troops’ exit, become positive catalysts for the oil prices.

Amid these plays, S&P 500 Futures gains 0.23% intraday whereas the US 10-year Treasury yields print 1.3 basis points of an upside to 1.187% after closing at the lowest since February the previous day.

Looking forward, industry oil inventory figures from the American Petroleum Institute (API), prior -4.728M, will be the key data to watch. However, major attention will be given to the qualitative catalysts for the near-term direction.

Technical analysis

Having defied the last week’s breakout of a one-month-old resistance line, near $71.55, WTI buyers jostle with 50-SMA, around $71.30. Hence, oil sellers remain hopeful until the quote posts a clear upside break of $71.55.