WTI consolidates Thursday’s losses above $37.00, ignores EIA inventories

• WTI marks another pullback from $37.20, seesaws near three-month low.
• Saudi Aramco raises domestic fuel prices to compensate for overseas discount.
• EIA Crude Oil Stocks Change grew 2.032M for the week ended on September 04.
• Risk catalysts, US dollar moves and Baker Hughes Rig Counts will be the key.

WTI picks up the bids near $37.60, up 0.89% on a day, during the Asian session on Friday. The energy benchmark printed losses the previous day as the US dollar regained the throne while broad risk-tone sentiment stayed murky. Even so, downbeat inventories data from the US Energy Information Administration (EIA) were mostly ignored as the quote bounces off following the release.

The black gold’s recent pullback may have taken clues from the Saudi news suggesting that Saudi Aramco has raised domestic fuel prices. The update came after the Arab nation offered discounts to the US and Asian buyers earlier in the week. Also in the line of the price cut was Abu Dhabi.

Additionally, the risk-rest, as portrayed by +0.21% prints of S&P 500 Futures, can also be the hand behind the latest retracement in oil prices.

On Thursday, the EIA stockpile marked a huge build of 2.032 million barrels for the week ending September 4^th versus the market consensus of -1.335 million barrels and -9.362 million barrels of the forecast. The data followed the footsteps of private inventory numbers, published by the American Petroleum Institute (API), which rose beyond -6.36M prior to +2.97M during the stated period. Reuters blame the stalled global economic recovery for the recent build in the stockpiles.

It’s worth mentioning that the challenges to the risk, comprising Brexit, coronavirus (COVID-19) and the US-China tussle, have been playing a major role off-late in favoring the US dollar strength. Also adding to the greenback’s strength, which has an inverse relation with the commodity, could be the recently increasing hopes of upbeat inflation data.

Hence, today’s US Consumer Price Index (CPI) for August, expected 1.2% versus 1.0% YoY, will be the key to watch. Also important is the weekly release of Baker Hughes US Oil Rig Counts, prior 181. While the restoration of rigs following the hurricane Laura can add to the negatives for the energy prices, the US dollar may gain further if the scheduled inflation gains.

Technical analysis

While July month low near $38.75 restricts the quote’s immediate upside, sellers will wait for a clear downside break of 100-day SMA, at $37.13 now, for fresh entries.