WTI retraces to $72.00 as US Dollar edges higher during China-induced dicey markets

• WTI crude oil pares the biggest daily gains in a week amid sluggish session.
• US Dollar’s heavy fall despite hawkish Fed signals joined price-positive API inventories to propel Oil price previously.
• Holidays in China, mixed catalysts and cautious mood ahead of multiple central bank announcements restrict WTI moves.
• EIA crude oil stockpiles, risk catalysts eyed for clear directions.

WTI takes offers to refresh the intraday low near $72.00 heading into Thursday’s European session. In doing so, the black gold consolidates the previous day’s gains, the biggest in a week, amid a sluggish Asian session, as well as due to the US Dollar’s pause in Wednesday’s downside.

Market sentiment remains slightly offbeat despite China’s holiday as fears of “higher for longer” interest rates join the US-China tension. The downbeat mood joins the hawkish bias at the Federal Reserve to put a floor under the US Dollar and weigh on the Oil price.

US Dollar Index (DXY) licks its wounds at the monthly low surrounding 102.00 despite Fed Chair Jerome Powell’s failure to convince markets of its hawkish bias. That said, Fed’s Powell stuck to hawkish bias in bi-annual testimony to the US House Financial Services Committee despite marking the absence of any fresh comments, as well as contrasting statements from other Fed Officials. The same weighed on the US Dollar the previous day. That said, Federal Reserve Bank of Chicago President Austan Goolsbee prod US Treasury yields and underpin the US Dollar weakness as he said that the decision last week was a close call for him. The central bank has to “do more sniffing” before another rate hike, Fed’s Goolsbee added.

It should be noted that a surprise draw in the Oil inventories, as per the American Petroleum Institute (API), -1.246M for the week ended on June 16 versus 1.024M prior, joined a heavy US Dollar fall the previous day to lure the WTI crude oil buyers. On the same line was the news suggesting the first recovery in the US Oil refining capacity, after a two-year downturn.

Elsewhere, doubts about China’s rejections of recession woes and the Sino-American tension add strength to the downbeat risk appetite, despite the dicey session, which in turn weighs on the Oil price.

While portraying the mood, the S&P500 Futures mildly offered for the fourth consecutive day near 4,405 whereas the US benchmark 10-year Treasury bond yields stabilize near 3.72% by the press time.

Looking ahead, the weekly official inventory data from the US Energy Information Administration (EIA) will join the multiple central bank announcements to entertain the energy traders.

Technical analysis

Failure to provide a daily closing beyond the 50-DMA hurdle, around $72.90 by the press time, joins sluggish markets to trigger the WTI crude oil’s consolidation.