WTI crude oil pares recent gains above $69.00 on API inventories, pre-Fed consolidation

• WTI crude oil consolidates the biggest daily gain in two weeks, fades bounce off 1.5-month low.
• Weekly API stockpile report suggests a surprise addition to the Oil inventories, SPR prints 33% fall in a year.
• US Dollar licks inflation-induced losses ahead of the Fed’s monetary policy announcements.
• Weekly EIA Crude Oil Stocks Change, US PPI may also entertain energy traders.

WTI crude oil clings to mild losses around $69.30 as it struggles to extend the previous day’s heavy rebound from the lowest levels in six weeks amid Wednesday’s sluggish Asian session. In doing so, the black gold aptly portrays the pre-Fed anxiety while also taking clues from the weekly prints of the American Petroleum Institute’s (API) Oil inventory data.

That said, the API Crude Oil Stock data for the period ended on June 9 flashed an addition of 1.024M barrels versus the previous contraction of 1.71 M.

It’s worth noting that the heavy reduction in the US Strategic Petroleum Reserves (SPR) joined the downbeat US Dollar to underpin the crude oil’s recovery on Tuesday. As per the latest data, the US SPR is down 33% compared to one year ago levels as it prints 353M level in the recent update.

Elsewhere, the US Dollar Index (DXY) slumped the most in a week, to the lowest levels since May 22, after the US inflation data fuelled speculations of the US central bank’s halt to the rate hike trajectory present in the last 10 monetary policy meetings. That said, the US Consumer Price Index (CPI) drops more-than-expected and prior releases to 0.1% MoM and 4.0% YoY. However, the Core CPI, known as the CPI ex Food & Energy, matches 0.4% monthly and 5.3% yearly forecasts. It’s worth noting that the US headline CPI dropped to the lowest since March 2021 and hence justifies the market’s expectations of the US Federal Reserve (Fed) hawkish halt, which in turn should have weighed on the US Dollar.

It’s worth mentioning that the fears of the US-Iran deal contrasted with the price-positive statements from Saudi Arabia, as well as with the OPEC+ production cuts, to challenge the Oil prices earlier.

Looking ahead, the pre-Fed caution may restrict immediate WTI moves but the US Producer Price Index (PPI) for May and the weekly official oil inventory data, released by the Energy Information Administration (EIA), expected -1.291M versus -0.45M prior can entertain the Oil traders.

Technical analysis

A clear upside break of a one-week-old descending resistance line, now immediate support around $67.80, directs WTI crude oil buyers to the $70.00 round figure before highlighting the 10-DMA hurdle of around $70.60.