WTI clings to mild gains around $77.00 on softer US Dollar, focus on OPEC, EIA Oil market reports

• WTI crude oil defends the previous day’s bounce off two-week low despite lacking upside momentum of late.
• Risk-on mood, receding hawkish Fed bets underpin WTI strength.
• US-China tension, cautious mood ahead of OPEC, EIA reports and US inflation probe energy buyers.

WTI crude oil remains sidelined near $77.00 as bulls struggle to cheer the broadly risk-on mood and the US Dollar weakness during early Monday. Even so, the black gold defends the previous day’s rebound from a short-term support line ahead of the monthly Oil market reports from the US Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC).

The commodity prices initially dropped to the two-week low before bouncing off $74.90 on the US Dollar’s slump despite witnessing the better-than-forecast Nonfarm Payrolls (NFP) reports. It should be noted that the fears emanating from the Silicon Valley Bank (SVB) and Signature Bank fallout drowned the US Treasury bond yields and the US Dollar on Friday.

However, the US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) undertook joint actions to tame the risks during the weekend.  While reacting to the US regulators’ actions, US President Joe Biden said, “American people and American businesses can have confidence that their bank deposits will be there when they need them.”

Even so, the market’s concerns that the SVB and Signature Bank flagged fragile conditions of the US banks pushed back hopes of more rate hikes from the US Federal Reserve (Fed) and drowned the US Treasury bond yields despite the risk-on mood during early Monday. With this in mind, Goldman Sachs expects to rate hike in March while the Fed Fund Futures also cut previously upbeat odds favoring a 0.50% rate lift in the Fed rate in March.

Elsewhere, a new term for China’s President Xi Jinping keeps the Sino-American tension on the table as he said earlier on Monday that they must resolutely oppose the interference of external forces, 'split' of Taiwan. The same raised fears of less energy demand from China and the US amid a lack of activity due to geopolitical tension.

Against this backdrop, S&P 500 Futures bounced off a 2.5-month low, up nearly 1.60% around 3,960 by the press time, whereas the US Treasury bond yields reverse the early-day rebound from monthly low amid fresh challenges for the hawkish Fed bets.

Looking ahead, Tuesday’s US Consumer Price Index (CPI) for February to direct immediate market moves. Following that, the Retail Sales and preliminary readings of the Michigan Consumer Sentiment Index for March, up for publishing on Wednesday and Friday, will be crucial for WTI crude oil traders to watch for clear direction.

Above all, monthly energy market reports from the OPEC and the EIA will be important for the WTI crude oil traders.

Technical analysis

Although a five-week-old support line restricts immediate WTI crude oil downside near $75.00, a daily closing beyond the 50-DMA hurdle surrounding $77.75 becomes necessary for the Crude Oil price to keep the buyers in the driver’s seat.