WTI struggles near seven-week high as China holidays push back Oil bulls, PMIs eyed

WTI crude oil remains sidelined around $81.70, after refreshing the multi-day high above $82.00 the previous day. In doing so, the black gold portrays the market’s inaction amid an absence of Chinese players due to the Lunar New year (LNY) holidays. Adding strength to the Oil price inaction could be the cautious mood ahead of the preliminary readings of January’s activity numbers from the key economies.

That said, the broad US Dollar weakness and easing recession fears, mainly backed by China-linked optimism, seemed to have propelled the WTI crude oil to $82.68, the highest level since December 05, 2022.

Adding strength to the energy market’s positive outlook could be the news suggesting a five-month high in India’s crude oil imports and Pakistan’s readiness to push back the power shortage with international help. It should be noted that the hopes of improved festive demand from China also propels the WTI crude oil prices of late.

Furthermore, the European Union and Group of Seven (G7) coalition’s price cap on Russian Oil exports also adds strength to the energy benchmark.

Alternatively, hawkish comments from the major central banks, despite chatters of policy normalization, join the talks of more output from the key suppliers to probe the WTI crude oil buyers. . Additionally, comments from US Energy Secretary Jennifer Granholm suggesting President Joe Biden’s readiness to veto the House Republican bill on Oil reserve also weigh on the black gold prices.  “The bill, called HR21, would prohibit the energy secretary from tapping the SPR without producing a plan to increase oil and gas leasing on federal lands - unless the release is for a severe oil supply emergency,” said Reuters.

Looking forward, the first readings of January’s activity data for Germany, the Eurozone and the US will be crucial for immediate directions. Additionally, the weekly oil inventory data from the industry player American Petroleum Institute (API), prior 7.615M, will also be important for the commodity’s immediate direction.

Technical analysis

Monday’s Doji candlestick on the Daily chart challenges Oil buyers unless the quote offers a daily closing beyond the 100-DMA, close to $81.75 by the press time.