WTI struggles to cheer US Dollar weakness, OPEC+ decision near $77.00 as Oil inventories jump

• WTI crude oil licks its wounds around three-week low after falling the most in a month.
• Jump in EIA Crude Oil Stocks Change joined mixed clues surrounding global economic outlook to favor bears.
• OPEC+ left output policy intact, US Dollar slumped on Fed’s dovish hike.

WTI crude oil pares recent losses around the three-week low as it picks up bids to $77.10 during early Thursday in Asia. In doing so, the black gold price seems to cheer the broad US Dollar weakness during a quiet session, after falling the most since early January.

The energy benchmark’s previous slump could be linked to a surprise build in the inventories as the US Energy Information Administration said on Wednesday that the US crude oil and fuel inventories rose last week to their highest levels since June 2021 as demand remained weak. That said, the EIA Crude Oil Stocks Change for the week ended on January rose by 4.14M versus 0.376M expected and 0.533M prior.

While tracing the bearish inventories, the WTI crude oil ignores the fears of intact supply cuts from the major Oil producers. In its latest Joint Ministerial Monitoring Committee (JMMC) meeting, the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC+, left the oil output policy unchanged. That said, OPEC+ agreed to extend the output cuts of 2 million barrels per day, which was assented to in October 2022.

On the same line, the broad-based US Dollar weakness should have also favored the WTI crude oil buyers, but failed. That said, the US Dollar Index (DXY) dropped to a fresh low in late April 2022 after the US Federal Reserve (Fed) announced a dovish rate hike.

It’s worth noting that softer activity data from China Caixin Manufacturing PMI, US ISM Manufacturing PMI and the UK S&P/CIPS Global Manufacturing also weighed on the black gold prices.

Moving on, WTI traders should pay attention to the risk catalysts for fresh impulse. Also important will be the central bank meetings of the European Central Bank (ECB) and the Bank of England (BoE) as they both could affect the US Dollar and the Oil price as well. Furthermore, Europe’s discussions on the Oil price cap for Russian exports are also important to watch for clear directions.

Technical analysis

A daily closing below 50-DMA, around $77.75 by the press time, directs WTI crude oil towards a two-month-old support line, close to $75.25 at the latest.