- Oil cheers firmer Yuan, hopes of more OPEC cuts, strong Chinese oil demand.
- Bounce capped by bearish US EIA Crude Stocks data, US-China trade worries.
WTI (futures on Nymex) turns south heading into the mid-European session, as market reassesses the chance of more OPEC cuts while lingering concerns over the oil demand growth outlook weigh.
Bulls exhausted, downside resumes
The oil-price recovery from seven-month lows fizzled out just below the 53 handle, as the sellers returned amid an ongoing recovery in the Treasury yields that usually diminishes the attractiveness of oil as an alternative higher-yielding asset. Moreover, the sentiment around the black gold remains undermined by a build in the US crude stockpiles, as reported by the Energy Information Administration (EIA) a day before.
The overnight recovery in the barrel of WTI can be largely attributed to reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the slide in oil prices. Further, a 14% rise in the Chinese crude oil imports in July pointed towards strengthening oil demand in the world’s no. 2 oil consumer, China and therefore, boosted the relief rally.
Looking ahead, the risk sentiment will remain the main market driver for risk assets such as oil, with the Yuan recovery having alleviated currency war fears and triggered risk-on market profile.
WTI Levels to watch
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