WTI struggles around $96.00 with eyes on S&P Global PMIs

• WTI pares the biggest daily loss in over a week ahead of the key activity data for July.
• Restoration of Nord Stream 1 gas pipeline drowned oil prices despite risk-on mood, softer USD.
• Libya’s resumption of oil production, ECB rate hikes and fears of recession in China also favor sellers.
• Key PMIs for the US, Eurozone and the UK will be crucial to watch.

WTI crude oil prices remain sidelined at around $96.00, after posting the biggest daily slump in eight days, as energy traders await fresh clues. The black gold dropped heavily the previous day, despite the risk-on mood, amid fears of more output and less demand.

The resumption of gas flows from Russia’s Nord Stream 1 pipeline was the key catalyst weighing on the oil prices. “Flows through Russia's Nord Stream 1 natural gas pipeline, which runs under the Baltic Sea to Germany, partially resumed after being shut for maintenance on July 11. The pipeline had already run on reduced volumes following a dispute sparked by Russia's invasion of Ukraine,” said Reuters.

On the same line as the European Central Bank’s (ECB) higher-than-expected 0.50% rate hike, as well as the announcement of the Transmission Protection Instrument (TPI) tool. Analysts at the Australia and New Zealand Banking Group (ANZ) describe it as a bond purchase program aimed at countering unwarranted disorderly market dynamics that pose a risk to effectively delivering on its price stability mandate.

Elsewhere, the resumption of oil production by Libya's National Oil Corp (NOC) and fears of China’s economic slowdown, as signaled by the Asian Development Bank (ADB) the previous day, also weigh on the black gold prices.

It’s worth noting, however, that the softer US dollar and risk-on mood may help the energy benchmark to lick its wounds.

Moving on, the preliminary activity details for July will be important for the oil traders amid fears of an economic slowdown. Also important will be how the major oil producers react to the US-led push to increase the output to tame the prices. Recently, Russian President Vladimir Putin called Saudi Arabia’s Crown Prince Mohammed bin Salman to discuss the output as they both led OPEC+ producers in June.

Technical analysis

Despite the U-turn from $100.69, WTI bears need validation from the 200-DMA level of $93.65 to retake control.