- Oil tracks the European equities higher as risk-on returns on fresh trade optimism.
- Focus shifts to US Q2 GDP figures and trade headlines for next direction.
WTI (futures on Nymex) halted its gradual Asian decline and reversed course in the European trading this Thursday, in the wake of a major turnaround in the risk sentiment on upbeat trade comments by China’s Commerce Ministry that lifted the demand for the higher-yielding assets such as oil.
US Q2 growth numbers hold the key
A renewed risk-on wave gripped the European markets after the Chinese official said that China is willing to resolve the trade spat via calm attitude, suggesting that China will refrain from retaliating against the new US tariffs that takes effect this Sunday.
Meanwhile, the prices also finds support from a big drawdown in the US inventories, which fell last week by 10 million barrels against expectations for a decrease of 2.1 million barrels, as reported by the Energy Information Administration (EIA).
However, it remains to be seen for how long the recovery in the risk sentiment would last, as markets brace for the US Q2 GDP release. A softer reading could refuel US recession fears and weigh down on the investors’ sentiment.
Further, looming global growth concerns amid ongoing US-China trade war, and its resultant impact on oil demand growth outlook, could also keep the upside in check.
WTI Levels to watch
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