WTI recovers with a drop in the US dollar ahead of the OPEC monthly report.
Oil prices are being weighed down by an OPEC+ pact and declining US crude supplies.
Concerns about covid and China’s faltering growth have risk traders on edge.
WTI (futures on Nymex) is attempting a good recovery from near $71.70, regaining the $72 mark, aided by renewed US dollar weakening across the board.
Profit-taking following the recent sell-off is possible ahead of OPEC’s critical monthly report, which is expected to include the cartel’s forecast on the oil market for 2022.
Following a Reuters report that Saudi Arabia and the United Arab Emirates (UAE) had achieved a compromise arrangement in a standoff over OPEC and its allies (OPEC+) oil output increases, the black gold fell about 2% on Wednesday on increased anticipation of tighter supplies.
Meanwhile, the Energy Information Administration (EIA) revealed that US oil stockpiles declined for the eighth week in a row last week, adding to the price of WTI. The EIA announced a day before that crude stockpiles fell 7.897 million barrels last week, compared to estimates for a fall of 4.359 million barrels.
Despite the recovery, US oil remains vulnerable due to the rapid spread of the Delta covid strain around the world and fears about China’s slowing economy – the world’s second-largest oil user. In higher-yielding oil, the risk-off market environment is expected to limit upside attempts.
The OPEC monthly report and Wall Street sentiment are next on the agenda for oil traders. In addition, Fed Chair Jerome Powell will speak on the Monetary Policy Report, which will have an impact on the dollar’s market movement./n
