- Firmer amid Gulf of Mexico hurricane risks, persistent USD weakness and Middle East tensions.
- Focus on geopolitical development ahead of US PPI and rigs count data.
WTI (futures on Nymex) stalled its gradual rise towards the 61 handle, as it awaits fresh catalysts for the next push higher. The bulls appear to gather pace for a sustained break above the 61.00 barrier, in a bid to renew the highest level in seven weeks.
Despite the latest leg down, the sentiment around the black gold continues to remain underpinned by looming supply disruption risks amid a potential hurricane and escalating Middle East tensions.
The US National Hurricane Center (NHC) warned earlier today that a tropical Gulf of Mexico storm Barry could become a hurricane on late Friday. In the face of the hurricane risks, oil companies in the Gulf of Mexico had cut more than 1 million barrels per day (bpd) of output or 53% of the region’s production, Reuters reports.
Adding to the bullish tone, Middle East tensions mount after Iran Iran’s attempted to block a British-owned tanker earlier this week. Meanwhile, the US-Iran rift over the tankers attack also continue to remain oil supportive.
Further, ongoing broad US dollar weakness combined with declining US crude inventories keep the prices steady near multi-week tops. A weaker US dollar makes the USD-denominated oil cheaper for foreign buyers. The greenback remains on the back foot amid increased Fed rate cut expectations following dovish Fed Chair Powell’s testimony.
Looking ahead, markets await the US rigs count data for fresh trading impetus, as they keep an eye on the hurricane threat.
Levels to watch