- WTI bounces off intraday low while staying mildly bid near the one-month top.
- Inventory draw, economic recovery hopes join US dollar weakness to favor energy bulls.
- Saudi-Iran tussle, US sanctions on Russia join vaccine jitters to test the sentiment.
- US Retail Sales, risk catalysts will be the key to watch.
WTI picks up bids from the day’s low to $62.85, up 0.07% intraday, during Thursday’s Asian session. The black gold jumped to the highest in one month the previous day, not to forget the biggest rise since late March, as price-positive inventory data joined the US dollar weakness to favor commodities.
Not only the oil stockpile figures from the Energy Information Administration (EIA) and the American Petroleum Institute (API), as well as weaker US dollar, but hopes for more energy demand also favored the WTI bulls.
While expecting more demand, economic recovery in the US and the UK, backed by the upbeat vaccinations, could be cited. Additionally, data from the US Department of Transporation (DOT) suggesting the Americans are driving more than they did in 2019 on interstate highways, per Bloomberg’s Javier Blas, also back the quote’s upside momentum.
Elsewhere, State TV news that Saudi intercepts 2 Houthi missiles and 4 drones as well as the US announcement of additional sanctions on Russia, not to forget Iran’s readiness to inflate uranium build, signal challenges to oil supplies. However, chatters surrounding the Johnson & Johnson’s vaccine, due to blood clotting issues, were mostly ignored as the US authorities cited amply supplies of Pfizer and Moderna vaccines to stay on the course of smooth jabbing.
Amid these plays, S&P 500 Futures rise 0.15% intraday after refreshing the record top the previous day whereas the US dollar index (DXY) drops to the fresh low since March 18.
Although the greenback’s weakness and the hopes of a faster economic comeback, coupled with OPEC’s upbeat demand forecast, favor WTI buyers, reflation fears and the US Treasury yields should be considered challenging the bulls.
Looking forward, oil traders may keep their eyes on the risk catalysts while the US Retail Sales for March may help to better forecast the US dollar moves, which in turn can help predict WTI performance.
Read: US March Retail Sales Preview: Can a strong rebound ramp up inflation expectations?
Technical analysis
A horizontal area comprising late February top and early March lows near $63.70-80 guards WTI’s immediate upside ahead of March’s high surrounding $67.85. Meanwhile, a downside break of 21-day SMA around $60.45 needs validation from the $60.00 threshold to recall the oil sellers.
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