WTI extends losses despite upbeat EIA stock data, trades below $86.00

• WTI price trades lower around $85.90 due to the stronger US Dollar (USD).
• US solid employment data exert pressure on the prices of black gold.
• Investors anticipate a hawkish stance from the Fed; contributing to the strengthening of the Greenback.

Western Texas Intermediate (WTI), the US crude oil benchmark, extends its losses on the second consecutive day. Spot price trades lower around $85.90 during the Asian session on Friday. The Crude oil prices experienced downward pressure despite the upbeat data release of Energy Information Administration (EIA) stock from the United States (US).

The report showed Crude Oil stocks decreased by 6.37 million barrels during the first week of September, surpassing the anticipated decrease of 2.06 million barrels. However, Crude oil prices received upward support as a result of continued ongoing supply cuts by OPEC+.

Moreover, Saudi Arabia, the largest oil exporter globally, has signaled its intention to prolong its voluntary production cuts by 1.66 million barrels per day (bpd) for the entirety of 2023. In this context, the influence of supply dynamics could help restrict the potential downside for WTI Oil prices.

Additionally, the G20 leaders' summit is set to commence in New Delhi this upcoming Saturday. Notably, US President Joe Biden is confirmed to participate, while Chinese President Xi Jinping will not be present. This circumstance is expected to exacerbate the already fragile and deteriorating relationship between these two global powers, which in turn could put pressure on the demand for crude oil as China is the largest Crude oil importer.

The recent strength of the US Dollar (USD), fueled by a consistent stream of positive economic data regarding the state of the US economy, has compelled oil prices to decline.

Economic data released on Thursday from the United States (US) revealed that US Initial Jobless Claims as of September 1, stood at 216K. The report indicated a decrease from the previous figure of 229K. This figure was better than the expected increase of 234K. While, in the second quarter (Q2), US Unit Labor Costs improved to 2.2%, up from the previous 1.6%, which was contrary to expectations of it remaining unchanged.

US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against six other major currencies, trades at around 104.80 at the time of writing. It's worth noting that it has retreated slightly from its peak on Thursday, which marked its highest level since April.

US Federal Reserve (Fed) is poised to sustain elevated interest rates over an extended timeframe. Furthermore, there is an expectation that the Fed will enact a 25 basis point (bps) interest rate hike during its November and December meetings. This hawkish stance could exert pressure on the prices of WTI Crude oil.