WTI bulls attack $112.00 as softer USD joins supply crunch fears ahead of API data

• WTI oil prices remain firmer around seven-week high, extending four-day uptrend.
• Softer USD, fears of EU oil embargo on Russia keep buyers hopeful.
• Headlines from the Middle East, covid fears in China challenge upside momentum.
• US Retail Sales for April, Weekly API inventory figures will be important for near-term directions.

WTI grinds higher around $112.00, after poking the late March tops during the four-day uptrend. That said, the black gold recently takes rounds to $111.80-90 as traders await more clues, which in turn highlights today’s US Retail Sales and API Weekly Crude Oil Stock.

The energy benchmark rose the most in four days the previous day, by refreshing the multi-day high, as the US Dollar Index (DXY) eased further from its 20-year top. That said, the greenback gauge printed a two-day downtrend as sellers approach 104.00 of late.

A fall in the NY Empire State Manufacturing Index for May, expected +15.5 versus -11.6 actual, joined comments from New York Fed President John Williams to weigh on the US dollar. Fed’s Williams backed Chairman Jerome Powell’s 50 basis points (bps) rate hike idea by highlighting inflation as the main issue. It should be noted that the news suggesting the US extend covid public health emergency beyond July also allowed the US dollar to pare some gains.

On the other hand, Saudi Arabia and Iran showed concerns over the latest economic scenario that restricts them to pump more oil into the markets. Also, China’s downbeat Retail Sales and Industrial Production for April joined fears of more days to overcome the covid resurgence to weigh on the commodity prices.

Alternatively, the European Union (EU) remains on the way to announcing major sanctions on Russian oil imports, which in turn could favor the WTI bulls. However, Hungary, the Czech Republic and Slovakia try to pull back the verdict but are likely to fail.

Moving on, the US Retail Sales for April, expected at 0.7% versus 0.5% prior, will precede the private oil inventory data from the American Petroleum Institute (API), prior 1.618M, to direct short-term WTI. Should the scheduled data suggests more draw and further weakness into the USD, the oil prices may have further upside room to track.

Technical analysis

A daily closing beyond an upward sloping trend line from late March, around $111.00 by the press time, enables WTI bulls to aim for the March 24 swing high surrounding $115.85-90.