WTI renews weekly top above $81.00 as API Crude Oil inventories deplete, geopolitical fears grow

• WTI crude oil extends the previous day’s recover to refresh multi-day top despite corrective bounce in US Dollar.
• Expectations of more energy demand due to adverse weather conditions, hurricane Idalia join China stimulus hopes to favor bulls.
• API Weekly Crude Oil Stocks Change marked the biggest draw since early September 2016.
• Risk catalysts, US data about inflation, employment and growth eyed for clear directions.

WTI crude oil buyers cheer a faster depletion in the inventories, as well as hopes of more energy demand, by ignoring the mildly bid US Dollar amid early Wednesday. That said, the black gold reached a weekly high near $81.40 by the press time.

API Weekly Crude Oil Stock marked the biggest slump since September 2016 while posting a fall of 11.486 million barrels (M) into the inventories versus the previous week’s decline of -2.418M. The same suggests faster exhaustion of the Oil stockpiles and challenges to refill the reserve tanks, which in turn signals more energy demand and fuels the WTI prices.

Elsewhere, fears of hurricane Idalia becoming ‘extremely dangerous’ Category 4 before storm surges hit Florida Gulf Coast, per The Guardian, flags geopolitical concerns about the energy benchmark and propel the WTI prices. Additionally, fears of heatwave in Europe and some parts of the US also increase hopes of witnessing higher energy demand.

Furthermore, the chatters about the early rate cuts from the People’s Bank of China (PBoC) and a cut into the mortgage rates, as well as likely improvement in the US-China ties, favor the Oil buyers.

However, China recently conveyed its dislike for the US Commerce Secretary Gina Raimondo’s complaints about the hardships for the US firms in China flags jitters about the relations among the world’s top two economies and challenges the oil buyers.

On the same line, the International Monetary Fund’s (IMF) readiness to be more cautious while allocating Special Drawing Rights (SDRs) in the future, due to the current environment of higher interest rates and inflation, also seems to renew the US Dollar’s demand and check the Oil buyers.

Amid these plays, the US Dollar Index (DXY) clings to mild gains around 103.60 while tracing a corrective bounce in the Treasury bond yields. However, the stock futures lack clear directions after the equities rallied heavily the previous day on downbeat US data.

Moving on, WTI buyers need validation from the weekly US inventory data from the Energy Information Administration (EIA), as well as clues about the Federal Reserve’s (Fed) policy pivot. Should the scheduled statistics suggest higher inventory depletion and chances of a soft landing in the US, the Oil price may rise further.

Technical analysis

WTI crude oil buyers cheer an upside break of the 21-DMA, around $80.80 at the latest, to aim for the previous weekly high of near $81.70.