WTI stays sidelined around $73.50 amid mixed clues

• WTI seesaws around fortnight top, sluggish of late.
• Iran news, Sino-American tussle and covid updates trouble oil traders.
• China’s official PMI came in softer, Caixin figures awaited for fresh impulse.
• US data challenge tapering woes, ISM Manufacturing PMI eyed.

WTI pauses three-day uptrend, subdued near $73.50, amid a quiet Asian session on Monday. The energy benchmark earlier benefited from the US dollar weakness but seems to struggle amid the latest mixed headlines concerning demand and supply.

During the weekend, the US and the UK alleged Iran for the attack on an Israeli oil tanker, which took place on Thursday, while also pledging to work with diplomatic partners for a response. Reuters mentioned that Iran rejected the blames by Israel by also quoting the US, Secretary of State Antony Blinken as, ‘there was no justification,’ for the attack.”

On a different page, the People’s Bank of China (PBOC) conveyed, during the weekend, that the bank will maintain prudent, flexible & targeted monetary policy, receding policy tightening fears from one of the world’s largest oil consumers. Additionally, US policymakers are up for revealing final details of over $1.00 trillion infrastructure spending, offering another positive sign for the black gold’s demand.

Alternatively, Beijing’s US Securities and Exchange Commission (SEC) took clues from China’s crackdown on IT and private education stocks by tightening rules from the Beijing-based companies. However, the market regulator from the dragon nation called for “closer communication with Washington in a bid to ease tensions after the US tightened controls,” per the Financial Times (FT).

It should be noted that the reduction in the virus-led death toll and faster vaccinations also keep oil buyers hopeful for further recovery and more demand. Though, the International Monetary Fund’s (IMF) bleak economic outlook and Delta covid variant resurgence challenge the optimists. Furthermore, repeatedly softer activity numbers from China and the OPEC+ signals to ease production controls also test the energy bulls.

Looking forward, China’s Caixin Manufacturing PMI and the US ISM Manufacturing for July, expected 51.00 and 60.8 versus 51.3 and 60.6 in that order, can add filters to the oil price’s further upside. However, risk catalysts are more important.

Technical analysis

With a clear upside break of a one-month-old descending trend line, WTI bulls are on the way to the yearly top, marked in July surrounding $76.40. However, $74.30 and $75.00 can offer intermediate halts to the expected upside.