- WTI remains on the back foot for second consecutive day.
- OPEC+ signals to increase production joins softer API inventory draw to probe bulls.
- Growth prospects battle US-Iran tussles, covid woes to weigh on energy prices.
- US PMIs, EIA Crude Oil Stocks Change will be important.
WTI prices remain lackluster, following the latest pullback, around $72.70, down 0.30% intraday, amid the early Asian session on Wednesday. The chatters over the OPEC+ discussion on output increase and higher-than-previous readings of private inventory data could be cited as the key catalysts for the black gold’s recent weakness.
As per the latest Weekly Crude Oil Stocks data from the American Petroleum Institute (API), for the period ended on June 18, inventories dropped 7.20 million barrels versus the previous draw of 8.54 million barrels.
Elsewhere, a group consisting of the Organization of the Petroleum Exporting Countries (OPEC) and closed allies like Russia, known as OPEC+, seems to be discussing a gradual reduction in the output curb ahead of next week’s meeting. Anonymous sources cite increasing demand as the key factor to push oil producers towards inflating output in August or September.
It should, however, be noted that testimony from Fed Chairman Jerome Powell had mixed signals for oil traders as the policymaker backed the continuation of easy money policies. While the same suggests further energy demand amid economic recovery, employment weakness cited in the testimony, as well as by other Fed members earlier in the day, also probed the bulls.
On the same line could be doubts over the US-China trade tussles version 2.0 amid Beijing’s inability to import previously agreed American goods, as well as fears of the Delta Plus variant of the coronavirus. Also contributing to the WTI weakness could be the uncertainty over US President Joe Biden’s infrastructure spending plan.
Amid these plays, Wall Street posted gains and the US 10-year Treasury yields declined. However, the S&P 500 Futures struggle for clear direction afterward.
Considering the scheduled preliminary activity numbers for the US and the weekly Crude Oil Stocks Change from the Energy Information Administration (EIA), WTI traders may have a busy day going forward. Forecasts suggest softer PMIs and downbeat official inventory data, which in turn keep the intraday sellers hopeful.
WTI’s latest moves justify Tuesday’s bearish spinning top candlestick at the highest levels since October 2018 amid overbought RSI conditions. However, oil bears should remain cautious until the quote stays beyond March’s top of $67.86.
