WTI establishes below $100.00 as UN-brokered truce in Yemen eases supply worries

• Oil prices plunged on truce move by Yemen as it may ease supply worries.
• Additional oil release by US President Joe Biden from the SPR has dragged the oil prices sharply.
• Record lows US Unemployment Rate is favoring an aggressive interest rate hike by the Fed.

West Texas Intermediate (WTI), futures on NYMEX, has plunged below $100.00 after the United Arab Emirates (UAE) welcomed the announcement of a truce by Hans Grundberg, Special Envoy of the United Nations (UN) Secretary-General for Yemen. The officials have announced a halt on military operations on the Saudi-Yemeni borders. The move has ended the seven-year conflict and is going to allow fuel imports in the Houthi areas. The action has reduced the supply worries and has impacted the oil market.

Earlier, the oil prices saw a massive sell-off after US President Joe Biden announced a release of one million barrels per day for six months out of their Strategic Petroleum Reserve (SPR). The additional oil release will initiate from May and is intended to release a total of 180 million barrels in the designated period. This is the third time in the last six months when the US administration has announced an oil release from the SPR. An additional oil release of 180 million barrels is equivalent to about two days of global demand, as per Reuters.

Meanwhile, the US dollar index (DXY) is scaling higher on record lows US Unemployment Rate. The US Jobless rate fell to record lows of 3.6% since February 2020, which indicates that the US economy is returning to its pre-Covid-19 levels and the full employment target of the Federal Reserve (Fed) is hoping a 50 basis point (bps) interest rate hike from the Fed.