Market news
23.05.2023, 05:01

WTI retreats towards $72.00 as US Dollar weighs on Oil price, PMIs, API inventories eyed

  • WTI crude oil fades week-start rebound amid inverse correlation with US Dollar.
  • IEA warns about Oil supply shortage in H2 2023, output from Canada, OPEC+ also drop.
  • US Dollar cheers hawkish Fed bets, optimism about debt ceiling despite no deal in sight.
  • API’s weekly inventory data, risk catalysts and monthly PMIs eyed for clear directions.

WTI sellers approach intraday low as a firmer US Dollar joins mixed sentiment in the Oil market to weigh on the quote amid early Tuesday. In doing so, the black gold price reverses from an intraday high to $72.15 by the press time.

It’s worth noting that the black gold previously cheered hopes of a reduction in the Oil price output in the second half (H2) of the year, backed by statements from the International Energy Administration (IEA). “The International Energy Agency (IEA), meanwhile, warned of a looming oil shortage in the second half of the year when demand is expected to eclipse supply by almost 2 million barrels per day (bpd), the Paris-based agency said in its latest monthly report,” per Reuters.

Also likely to have favored the Oil price could be the wildfires in Canada and geopolitical tension between the West and Russia, not to forget the OPEC+ output cut accord. Reuters said, “Total exports of crude and oil products from OPEC+ plunged by 1.7 million bpd by May 16, JP Morgan said, adding that Russian oil exports will likely fall by late May.”

Elsewhere, China faced the heat of the Group of Seven Nations (G7) summit in Hiroshima as the global leaders discussed ‘de-risking’, or weaning themselves off an over-reliance on Chinese imports at the summit. On the same line, Russia is also at the loggerheads with the West due to its war with Ukraine and hence challenges the energy market.

Alternatively, the firmer US Dollar and hawkish hopes from the Federal Reserve, as well as economic fears surrounding China, weigh on the Oil price of late. US Dollar Index (DXY) grinds higher around 103.30 during the two-day uptrend even as US President Joe Biden and House Speaker Kevin McCarthy failed to offer a deal to avoid the debt ceiling expiry during the latest negotiations. The reason for the greenback’s run-up could be linked to the policymakers’ optimism of reaching an agreement to avoid the US default.

On the other hand, the recent run-up in the odds favoring the Federal Reserve’s (Fed) 0.25% rate hike in June, as well as no rate cuts in 2023, also underpin the US Dollar’s latest run-up and weigh on the WTI crude oil.

While the firmer US Dollar challenges the demand-supply matrix and weighs on the Oil price, today’s PMIs from the key global economies and weekly industry inventory report for the black gold, namely from the American Petroleum Institute (API) will be crucial for clear directions.

Also read: US S&P Global PMIs Preview: Dollar set to rise on a slip in the services sector

Technical analysis

Failure to cross the 21-DMA joins a downside break of a two-week-old ascending support line, close to $72.55 at the latest, to keep the WTI crude oil bears hopeful.

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location