WTI trades with modest losses below $81.00, seems vulnerable near two-month low

• WTI remains depressed for the third straight day and languishes near a two-month low.
• Receding fears about supply disruptions from the Middle East war weigh on Oil prices.
• Worries that a slowdown in China will dent fuel demand contribute to the offered tone.

West Texas Intermediate (WTI) Crude Oil prices trade with a negative bias for the third successive day on Wednesday and languish near a two-month low touched the previous day. The commodity remains depressed below the $81.00/barrel mark through the Asian session and seems poised to weaken further in the wake of easing global supply concerns.

Market participants seem less worried about the potential for other Arab countries entering the Israel-Hamas war and a possible supply disruption from the Middle East. Furthermore, a Reuters survey showed that OPEC crude output rose by 180,000 barrels per day (bpd) in October. Adding to this, the Energy Information Administration (EIA) said on Tuesday that US field production of crude oil rose to a new monthly record in August, at 13.05 million barrels per day. This, along with weaker business activity data from China, raises concerns about slowing fuel demand from the world's top oil consumer and continues to weigh on the black liquid.

The official PMI released by the National Bureau of Statistics on Tuesday showed that China's Manufacturing PMI unexpectedly fell into contraction territory in October, while the non-manufacturing PMI pointed to a slowdown in the vast service sector and construction. A Caixin-sponsored survey also confirmed the official figures and showed that activity in China’s manufacturing sector contracted in October. This suggests that stimulus efforts from China only provided limited support to the fragile economic recovery. This comes amid worries about headwinds stemming from rising borrowing costs and validates the negative outlook for Crude Oil prices.

Traders, however, might refrain from placing aggressive directional bets and prefer to wait on the sidelines ahead of the crucial FOMC policy decision, scheduled to be announced later during the US session. Market participants will closely scrutinize the accompanying monetary policy statement and Fed Chair Jerome Powell's comments at the post-meeting press conference for cues about the future rate-hike path. This, in turn, will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the USD-denominated commodities, including Crude Oil prices.

Technical levels to watch