- WTI’s pullback from $39.30 fails to defy a two-day losing streak.
- China’s sustained increase in oil imports confronts chatter of easing output cuts.
- US inflation data, API stockpiles and American earnings are in the spotlight.
WTI rises to $39.51, intraday high of $39.89, during the pre-European session on Tuesday. Even so, the black gold loses 0.60% on a daily chart while portraying the second consecutive loss-making day. While hopes of increasing demand recently underpinned the quote’s recoveries, fears of supply outage and the US dollar pullback probe the buyers.
China’s crude imports grew by 33.0% to 53.18 million tonnes of oil in June. This suggests the second month of record oil buying by the world’s biggest energy consumer. Earlier in the day, the dragon nation’s trade numbers strengthened calls that the world’s second-largest economy is gradually overcoming the coronavirus (COVID-19) led economic disruption.
Elsewhere, speculations surrounding the OPEC+ production cuts have been weighing the WTI off-late. While Saudi Arabia, Iran and Russia are favoring easing of the output cuts, most likely by two million barrels a day, others might not agree considering the latest price moves. The global oil producers will meet during this week and discuss the future of the widely-debated 9.7 million barrels a day of a production cut.
Other than the demand-supply matrix, the US dollar’s pullback and souring of the risk-tone sentiment also play their roles. The US dollar index (DXY) snaps two-day losing streak while taking rounds to 96.57 as we write. The greenback seems to have benefited from the recent risk aversion wave amid fears of escalating US-China tussle and the return of the lockdowns in major American states.
Moving on, American Petroleum Institute’s (API) weekly inventory data, prior +2 M, will offer oil-specific clues. Though, traders will not rule out seeking upbeat earnings reports from the US top-tier banks, together with the risk recovery, to pierce $40.00.
Technical analysis
Unless crossing a downward sloping trend line from June 23, at $41.00 now, sellers can keep targeting an ascending trend line from June 25, currently around $39.10. Though, the oil benchmark’s further weakness will be challenged by a one-month-old support line near $39.00.
Share
