WTI fades bounce off two-week low amid mixed concerns

• WTI struggles to hold the previous day’s rebound amid quiet markets.
• Cautious sentiment ahead of US Core PCE inflation data, absence of US stimulus deal test recovery moves.
• Softer USD, hopes of firmer energy demand  favor bulls.

WTI drops back towards the $82.00 threshold, down 0.40% intraday around $82.15 amid an inactive start to Friday’s trading. The black gold marked a notable reversal from a fortnight low the previous day.

The oil benchmark dropped to the lowest since October 14 the previous day amid the initial US dollar pick-up and risk-off mood during early Thursday. However, the US dollar’s slump following the US Q3 GDP and European Central Bank (ECB) Interest Rate Decision recall the oil buyers.

That said, the US Dollar Index (DXY) dropped the most since October 13  after the US Q3 GDP US Q3 GDP slipped below 2.7% forecast to 2.0%, much lower than 6.7% prior. Also favoring USD bears was the European Central Bank’s (ECB) hint to start tapering the monthly bond purchases while saying the PEPP (that’s the pandemic emergency purchase program) will end next March. The regional central bank left monetary policy unchanged, as expected, with refinancing rate at 0.0% and deposit rates at -0.5%.

Elsewhere, Russia signals to help Europe tackle the gas crisis jostles with the geopolitical tensions in the Middle East to confuse the energy traders. Additionally, the supply outage fears and producers’ readiness to ease production controls, with lesser pace, also flash mixed messages and challenge the quote.

It should be noted that the absence of a deal on the US President Joe Biden’s $1.75 trillion infrastructures spending plan seems to have recently weighed on the S&P 500 Futures even as the Wall Street benchmark closed positive. The same should have exerted the latest pressured on the WTI prices.

Moving on, US Core PCE Inflation data for October, Fed’s favorite price pressure indicator will be important to watch for fresh impulse amid chatters over monetary policy tightening. The Core Personal Consumption Expenditures (PCE) - Price Index for September is likely to ease to 0.2% from 0.3% prior on the MoM basis. Additionally, the weekly prints of the Baker Hughes US Oil Rig Count, previous +443, will also be important to watch for oil traders.

Technical analysis

Only if the quote manages to provide a daily closing below the two-month-old support line near $81.40, the WTI sellers may take risk of entry, until then the black gold is ready to refresh multi-month high above $85.00.