- WTI trims Asian session losses while recovering from an intraday low of $38.19.
- Downbeat figures of China inflation confront geopolitical tension in Libya.
- The pre-Fed trading lull and US dollar weakness add to the oil traders’ confusion.
- FOMC, EIA data will be the key, qualitative headlines also become important to watch.
WTI oil prices on NYMEX print mild losses of 0.20% while taking rounds to $38.50 amid early Wednesday’s trading. The oil benchmark earlier dropped amid downbeat China data and the modest tension surrounding the UK and the US fight against Beijing. In doing so, the energy traders ignore geopolitical tension in Libya.
Libya’s National Oil Corporation remains on the force majeure mode amid the domestic geopolitical crisis. Earlier in Asia, the European leaders, including those from France, Germany, Italy and the European Union (EU), urged conflicting parties in Libya to swiftly agree on a ceasefire. However, the situation hasn’t improved since then.
Elsewhere, China’s May month Consumer Price Index (CPI) and Producer Price Index (PPI) data flashed downbeat figures but were mostly ignored. Additionally, the dragon nation’s tussle with Washington and Britain also seems to weigh the oil benchmark. Furthermore, notable build in the private inventory data from the American Petroleum Institute (API), by 8.42 million barrels versus forecasted declines of 0.483 million barrels, also weakened the barrel of the black gold.
However, traders are waiting for the US Federal Open Market Committee’s (FOMC) monetary policy decision for fresh impulse. Other than that, the official reading of stockpiles from the Energy Information Administration (EIA) also becomes the key to watch. While the Fed isn’t expected to announce any major surprises, EIA inventories are expected to recover from -2.077 million barrels to -1.45 million barrels.
Other than these catalysts, any surprise moves by the global oil producers, either from the OPEC or outside, could also offer moves to the presently sluggish energy prices.
Also read: Crude oil prices may correct 15-20% lower – Goldman Sachs
Technical analysis
The recent lower high formation on the daily chart seems to drag the oil benchmark towards an ascending trend line from May 13, currently around $36.95. Though, a 100-day SMA level around $35.40 could restrict the quote’s further downside. Meanwhile, buyers will keep eyes on the sustained trading above $40.00 for building the long positions.
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