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  • WTI holds lower ground, extends Friday’s pullback from monthly top.
  • Challenges to US President Joe Biden’s stimulus, lack of fresh positives for oil back consolidation moves.
  • S&P 500 Futures drop 0.20%, Tokyo open eyed amid vaccine hopes, geopolitical tension.

WTI trims intraday losses while recently picking up bids to $62.93, down 0.27% on a day, during the Asian session on Monday. Even so, the oil benchmark drops for the second consecutive day after stepping back from a one-month high on Friday.

Although persistent US dollar weakness and risk-on mood should favor oil buyers, fears of the early peak in demand are the latest to trigger the market’s consolidation. As per Goldman Sachs’ analysis, oil demand suggesting peaking out past-2025.

Also on the negative side is the intraday loss of 0.20% by the S&P 500 Futures as it suggests challenges to risk. Behind the moves could be US Republicans’ readiness to block President Joe Biden’s $2.25 trillion infrastructure spending. Also on the risk-negative side could be the US-Russia tension and an absence of progress in the Washington-Tehran nuclear talks.

It should, however, be noted that the broad recovery in the US and the UK, backed by the speedy vaccinations keep the WTI bulls hopeful even as OPEC+ eyes to restore oil output after multiple months of voluntary cuts.

Moving on, a light calendar in Asia, as well as in the West, should keep WTI traders at the mercy of the risk catalysts. Given the latest pullback in S&P 500 Futures waiting for Japanese markets to open, oil traders may keep their eyes on the US dollar index (DXY) and bond moves for clarity of trades.

Technical analysis

Given the commodity’s failure to cross the $64.00 threshold, its pullback towards the late March top near $62.25 can’t be ruled out.

 

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