WTI bulls poke $98.00 as DXY renews three-week low ahead of US GDP

• WTI buyers keep reins during two-day uptrend amid mixed concerns.
• Fed-inspired USD weakness favor oil buyers but recession fears challenge upside moves.
• Headlines suggesting Russia, US oil reserve release could entertain traders ahead of US Q2 GDP.

WTI crude oil prices remain firmer around $98.00 during early Thursday morning in Europe.

In doing so, the black gold rises for the second consecutive day while cheering the softer US dollar. However, fears of an economic slowdown appear to challenge the commodity bulls.

That said, the US Dollar Index (DXY) drops to the lowest levels since July 05 while taking offers near 106.05, down 0.30% intraday at the latest. The greenback’s gauge declined the most in six weeks the previous day after the US Federal Reserve (Fed) disappointed USD bulls.

The Fed matched market forecasts by announcing a 75-bps rate increase. The underlying reason for the pair’s weakness could be attributed to Fed Chairman Jerome Powell’s speech as it signaled that the hawks are running out of fuel. Key comments from the Fed’s Powell were that the rates had reached neutrality, so there won't be any more forward guidance, as well as rates will be decided meeting by meeting.

It’s worth observing that the US Treasury yield curve inversion eased just after the Fed but keeps signaling fears of the economic slowdown of late. The US 10-year Treasury yields dropped nearly four basis points (bps) to 2.78% while the 2-year bond coupons slumped by 2.58% to 2.98% after the Fed’s 0.75% rate hike. Even so, the gap between the key US bond coupons remains the widest since 2000 and in turn hints at the US recession woes. It should be noted that the US 10-year Treasury yield pares recent losses around 2.80% and also remains pressured around 3.00% by the press time.

Elsewhere, a fall in the US crude oil inventories joined fears of further reduction in the Russian energy exports to Europe to favor the commodity buyers.

“US crude oil stockpiles dropped 4.5 million barrels last week as exports surged to an all-time high due to U.S. crude's big discount to international benchmark Brent, the Energy Information Administration said,” per Reuters.

On Wednesday, Gas flows through the Nord Stream 1 pipeline fell to a fifth of the pipeline's capacity while Italy's Eni said it will receive lower volumes from Russia's Gazprom, report Reuters.

Moving on, updates from the virtual meeting between US President Joe Biden and his Chinese counterpart Xi Jinping will join the recession fears to entertain intraday AUD/USD traders. However, major attention will be given to the flash readings of the US second quarter (Q2) Gross Domestic Product (GDP) amid recession woes.

Technical analysis

A downward sloping resistance line from July 08 joins 21-DMA to restrict short-term WTI upside around $98.50. Pullback moves, however, remain elusive until the quote stays above a fortnight-old rising trend line, at $94.30 by the press time.