WTI crude oil stays defensive near $73.00 amid softer China inflation, cautious optimism

• WTI crude oil remains pressured after reversing from one-week high.
• Downbeat China inflation data joins mildly upbeat sentiment to prod Oil traders.
• Price-negative details of EIA crude oil stockpiles, cautious mood ahead of top-tier data/events challenge recent moves.

WTI crude oil holds lower grounds near $72.80 amid early Thursday, following its pullback from a weekly top the previous day. In doing so, the black gold justifies downbeat inflation data from China and the US amid mixed sentiment and the price-negative Oil inventories.

Recently, China’s headline Consumer Price Index (CPI) eases to 0.1% YoY from 0.7% prior, versus 0.3% expected, while the Producer Price Index (PPI) slides to -3.6% YoY compared to -3.2% market consensus and -2.5% previous readings.

On Wednesday, US Consumer Price Index (CPI) eased to 4.9% YoY for April versus market expectations of reprinting 5.0% inflation mark, marking the first below 5.0% print in two years. The MoM figures, however, matched the upbeat 0.4% forecasts compared to 0.1% previous readings. Further, the CPI ex Food & Energy, known as the core CPI, matched 5.5% and 0.4% market consensus on a yearly and monthly basis respectively versus 5.6% and 0.4% priors in that order.

It’s worth noting that the weekly official Oil inventory data from the US Energy Information Administration (EIA) also exert downside pressure on the energy benchmark. That said, the EIA Crude Oil Stocks Change rose to 2.951M for the week ended on May 05 versus -0.917M market forecasts and -1.28M prior.

On a different page, the risk profile remains mildly positive and put a floor under the WTI prices as softer US inflation data weighs on the hawkish Fed bets. Also supporting the cautious optimism is the US policymakers’ preparations to avoid debt ceiling expiry despite failing in the initial attempt. Furthermore, expectations of the US-China policymakers’ meeting also underpin the slightly upbeat sentiment.

While portraying the mood, S&P 500 Futures print mild gains and the US Treasury bond yields extend the previous day’s downbeat performance, which in turn weighs on the US Dollar Index (DXY).

Looking forward, more clues of the US inflation, via the Producer Price Index (PPI) for April, expected to ease to 2.4% YoY, eyed for clear WTI directions.

Technical analysis

WTI crude oil’s failure to provide a daily closing beyond the one-month-old resistance line, around $72.80 by the press time, keeps energy sellers hopeful of witnessing a pullback in price towards the 10-DMA support of near $72.30.