WTI bulls cheer USD pullback to regain $96.00, recession, EIA inventories eyed

• WTI bounces off three-month low, snaps two-day downtrend.
• US dollar retreats from 20-year high as traders await fresh clues.
• API printed surprise oil inventory build, US tightens sanctions on Iran.
• Weekly EIA stockpiles, US ADP Employment Change could entertain intraday traders.

WTI prints the first daily gains in three around $96.50, portraying a corrective pullback near the three-month low, amid softer US dollar. Adding strength to the recovery moves are the US sanctions on Iran and global ire over Russian oil output.

US Dollar Index (DXY) retreats from the 20-year high, marked the previous day, while flashing 0.20% intraday losses around 106.90 level. The greenback’s gauge versus six major currencies tracks downbeat US Treasury yields to pare recent gains ahead of the key employment data.

Also weighing on the greenback could be the recently softer US numbers. That said, US ISM Services PMI for June dropped to 55.3 versus 55.9 in May. The actual figure, however, came in better than the market expectation of 54.5. It’s worth noting that the US JOLTS Job Opening for May declined to 11.25 million versus 11.00 million expected and 11.68 million prior.

Additionally, the US tightens its grip over Iran’s energy business while the Group of Seven (G7) nations keep trying to tame Russian oil exports. “The United States on Wednesday imposed sanctions on a network of Chinese, Emirati and other companies that it accused of helping to deliver and sell Iranian petroleum and petrochemical products to East Asia, pressuring Tehran as it seeks to revive the 2015 Iran nuclear deal.”

On the contrary, weekly oil stockpile data from the American Petroleum Institute (API) marked an increase of 3.825 million barrels versus the previous reduction of 3.799 million barrels.

Additionally, the yield curve inversion, a condition where near-term bond yields are higher than the longer-dated ones, appears to highlight the recession fears and weigh on the black gold prices. That said, the 2-year bond coupon retreats to 2.96% while showing the inverse gap with the 10-year yields and hints at the global recession. On the same line, International Monetary Fund (IMF) Managing Director Kristalina Georgieva also said, per Reuters, “Global economic outlook has 'darkened significantly' since last economic update.” the IMF chief also added, “Cannot rule out the possible global recession in 2023.”

Moving on, the official weekly oil inventory data from the Energy Information Administration (EIA), prior -2.762 million barrels, will join the US ADP Employment Change for June, expected 200K versus 128K prior, to direct short-term WTI moves.

Technical analysis

Unless breaking the $92.65-70 horizontal support area, established since March, WTI prices are likely to march towards June’s low of $101.17.