WTI bears ignore Russia-linked fears around $88.50 amid firmer USD

• WTI remains on the back foot despite escalating geopolitical fears.
• US President Biden urges citizens to leave Ukraine urgently on “increased threats of Russian military action”.
• OPEC keeps oil demand forecasts unchanged, conveyed lag in the supply increases.
• Firmer yields, hawkish Fedspeak keeps greenback strong, US data eyed.

WTI stays pressured around intraday low, down 0.60% on a day near $88.45 during Friday’s Asian session. In doing so, the black gold justifies the US dollar’s negative correlation with the commodities while paying little heed to the geopolitical issues surrounding Russia.

That said, the US Dollar Index (DXY) keeps the previous day’s gains, backed by the jump in the headline inflation data that propelled Fed rate hike concerns, around 95.80 by the press time.

On the other hand, the US 10-year Treasury yields remain firmer around the highest levels since July 2019, up one basis point at 2.035% by the press time. However, the S&P 500 Future dropped 0.50% at the latest and portrays the market’s risk-off mood, which seems to weigh on the oil prices.

A five-decade high US Consumer Price Index data for January, to 7.5% YoY figure versus 7.3% expected and 7.0% prior, seems to propel the yields on concerns over the 50 basis points (bps) of a Fed rate-hike in March. The upbeat expectations were recently backed by St. Louis Fed President James Bullard and Federal Reserve Bank of Richmond President Thomas Barkin.

Elsewhere, US President Joe Biden confirmed the earlier notice from the US Statement Department to all citizens to leave Ukraine “right now” during an interview with NBC News. On the same line were fears of US-North Korea tussles as the hermit kingdom refrains from the global push towards dumping the missile tests.

Alternatively, the Organization of the Petroleum Exporting Countries (OPEC) announced in its latest monthly report that it left the 2022 world oil demand growth forecast unchanged at 4.15 million barrels per day (bpd), as reported by Reuters. The OPEC report also stated, “OPEC's oil output rose by 64,000 bpd in January to 27.98 million bpd, lagging pledged increase under OPEC+ deal."

It should be noted that the recently increasing US-China trade tussle also challenges the oil prices and hence should also be watched for near-term directions.

For intraday, the preliminary readings of the US Michigan Consumer Sentiment Index for February, expected 67.5 versus 67.2 prior, will be important data. Though, major attention will be given to Fedspeak and yields.

Technical analysis

Thursday’s Doji candlestick keeps WTI crude oil sellers hopeful to test the 21-DMA level of $86.80.