After marking the worst daily losses in over a week, WTI remains depressed.
EIA inventories fell more than expected, and the US dollar fell.
Energy prices are being weighed down by Covid troubles, fears of reflation, and a Saudi-UAE pact.
DXY fluctuations, as risk triggers, become the key to a new impulse.
During the early Asian session on Thursday, WTI oil prices maintained the previous day’s gloomy performance, which has been sluggish of late. The black gold was pulled down by news of a production pact between Saudi Arabia and the United Arab Emirates, which did not help the stockpile draw or the weak US dollar.
According to Reuters, “UAE will have a higher oil production baseline at 3.65 million barrels per day for future oil transactions,” citing an anonymous source. The output deal between Saudi Arabia and the UAE (United Arab Emirates) takes away the short-term uncertainty around the OPEC+ production cuts that have recently pushed up oil prices. Furthermore, the coronavirus (COVID-19) variant problems, as well as the uncertainties surrounding US President Joe Biden’s stimulus, contribute to the oil price decline.
As a result, WTI crude oil prices disregard a higher-than-expected inventory draw of 4.359 million barrels, up from -6.866 million the week before, to -7.890 million barrels, according to the Energy Information Administration’s (EIA) weekly Crude Oil Stocks Change for the week ending July 09.
It’s worth mentioning that the commodity failed to applaud US dollar depreciation following Federal Reserve Chairman Jerome Powell’s dovish comments in his bi-annual hearing, implying that “a lot of warning” would be given before changing monetary policy.
Following the uneven close of the Wall Street benchmarks, US stock futures are struggling to find a clear direction. Furthermore, after the largest decline in a week, US Treasury yields take a pause.
Looking ahead, China’s second-quarter (Q2) GDP, which is forecast to grow at 1.2 percent QoQ vs 0.6 percent the previous quarter, will be crucial, as any deterioration in the world’s largest oil consumer’s output might extend WTI’s recent decline. In the US session, it will also be vital to keep an eye on the US dollar’s movements due to a light calendar.
WTI sellers are directed toward a three-week-old rising trend line near $71.60 by a daily close below the 21-DMA, which is around $73.15./n
