WTI ignores risk aversion, downbeat Oil inventories to pare losses around $80.50 as US Dollar retreats

• WTI portrays bullish consolidation around 10-week high, picks up bids of late.
• US Dollar’s corrective bounce, risk-off mood and downbeat EIA stockpiles previously probed Oil buyers.
• Geopolitical woes, the greenback’s fresh downside keeps WTI bulls hopeful ahead of key US jobs report.

WTI crude oil regains upside momentum, following the first daily negative in five, as the US Dollar reverses the previous day’s corrective bounce. That said, the black gold picks up bids to print mild gains around $80.55 by the press time of early Thursday morning in Asia.

That said, the US Dollar’s corrective bounce joined downbeat Oil inventory data to trigger a pullback in the commodity prices. Also challenging the WTI buyers were recession fears. However, the broad USD weakness and geopolitical tensions emanating from China and Russia keep the buyers of the energy benchmark hopeful.

The weekly stockpile data from the US Energy Information Administration (EIA) marked -3.739M figure versus -2.329M market forecasts and -7.489M prior. Earlier in the week, the American Petroleum Institute (API) also flashed downbeat inventory data for the week ended on March 31, -4.346M versus -6.076M prior.

Elsewhere, US Dollar Index (DXY) fades the previous day’s bounce off a two-month low as it retreats to 101.82 by the press time amid recently increased odds of the US Federal Reserve’s (Fed) no rate hike in May. It should be noted that downbeat US data allowed the hawkish Fed bets to reverse earlier in the week.

After a disappointing 19-month low of the US JOLTS Job Openings for February, the ADP Employment Change for March dropped to 145K from 200K expected and an upwardly revised prior of 261K. On the same line, the final readings of S&P Global Composite and Services PMIs for March also came in downbeat as the former one declined to 52.3 from 53.3 preliminary estimations while the Services PMI dropped to 52.6 from 53.8 anticipated earlier. More importantly, the US ISM Services PMI for the said month amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.

It should be noted that CME’s FedWatch Tool suggests a nearly 57.0% of chance that the US central bank will pause its rate hike trajectory in May.

While portraying the mood, S&P 500 Futures print mild losses while tracing the Wall Street benchmarks. However, the yields remain pressured and weigh on the US Dollar. It’s worth noting that the benchmark US 10-year Treasury bond yields dropped in the last five consecutive days to refresh a seven-month low on Wednesday while the two-year counterpart also printed a four-day downtrend before bouncing off 3.79% at the latest.

Moving on, second-tier US employment clues and risk catalysts may entertain WTI crude oil traders ahead of Friday’s key Nonfarm Payrolls (NFP).

To sum up, the OPEC+ supply cut joins the broad US Dollar weakness to underpin the Oil price strength.

Technical analysis

A four-month-old resistance line challenges WTI crude oil buyers around $81.80. The likely pullback, however, remains elusive unless the quote stays beyond ascending support line from March 24, close to $79.20 at the latest.