- WTI stays on the front foot inside $65.25-50 trading range.
- API Weekly Crude Oil Stock eased from -7.688M to -2.533M for the week ended on May 07.
- Colonial Pipeline stays on the course to restore supplies before weekend, OPEC raised demand outlook.
- Oil markets turn sluggish ahead of US inflation, official stockpile data and UN meeting on Middle East tensions.
WTI ends Tuesday with the heaviest gains in a week, up 0.80% around $65.45, as oil traders cheered US dollar weakness. Also on the positive side was the ongoing absence of supplies from the Colonial Pipeline and the US government’s rejection to use emergency measures to balance the energy markets. In doing so, the bulls ignored the weekly inventory data from the American Petroleum Institute (API).
The industry report showed that the weekly crude oil stock dropped 2.533 million barrels versus the previous draw of 7.688 million barrels.
The US dollar index (DXY) remained pressured, dropped to the fresh low since late February, amid market fears ahead of the key Consumer Price Index (CPI) data. Given the lack of tuning between the market’s reflation fears and the Fed’s defense to the easy money policies, today’s US inflation figures will be watched to confirm whether it’s a one-time affair or a real challenge to the US Federal Reserve (Fed).
Read: US Consumer Price Index April Preview: The two base effects of inflation
It’s worth mentioning that the Wall Street benchmarks also portrayed the risk-off mood, backed by the sustained downtrend in the technology shares.
Other than the market sentiment and the US dollar moves, the ongoing meeting among the United Nations (UN) members and the Colonial Pipeline outage keeps WTI buyers hopeful. Also supporting the oil bulls was the Organization of the Petroleum Exporting Countries (OPEC) oil forecasts. The oil cartel left its expectations for 2021 world oil demand growth unchanged at 5.95 million barrels per day (bpd), as reported by Reuters, in its monthly report.
Looking forward, the official stockpile report by the Energy Information Administration (EIA), expected -2.25M versus -7.99M, will be important. However, nothing more crucial than the US inflation data for April, expected to pick up to 3.6% YoY versus 2.6% prior.
A six-week-old rising trend channel keeps WTI buyers hopeful until the quote stays above $63.00 on a daily closing basis.
