- WTI takes a U-turn on renewed risk-on wave amid trade optimism.
- US-Iran conflict continues to please the buyers.
- Swelling US inventories, returning Saudi supply to cap oil gains.
WTI (futures on Nymex) bounced sharply from daily lows of 56.19 and now looks to regain the 57 handle, helped by a return of risk appetite in the European trading following the upbeat comments by the Chinese Commerce Ministry Spokesman Gao on trade talks.
Resurgent USD demand to limit the upside?
The barrel of WTI stalled its steady Asian decline and jumped nearly 50 cents after US-China trade optimism returned and boosted the demand for the higher-yielding/ risk assets such as the equities, oil, etc. Gao said that they are preparing for making progress in trade talks in October.
Moreover, fresh supply risks amid renewed US-Iran geopolitical tensions also render oil-positive. On Thursday, the US President Trump barred senior Iranian and Venezuelan officials/families from entering US.
Despite the latest uptick, it remains to be seen if the prices can extend the bounce, as the unexpected build in the US Crude Stocks, as reflected by the US Energy Information Administration (EIA) data on Wednesday, continue to weigh on the investors’ sentiment alongside the returning oil supplies from Saudi Arabia.
Additionally, broad-based US dollar strength could also cap the further upside in the black gold. A stronger greenback makes the USD denominated oil expensive for the holders in foreign currencies.
Later today, the focus will remain on the trade and US political-related developments for the next direction in oil prices.
WTI Levels to watch
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