WTI weakens further below $82.00/barrel mark, refreshes weekly low ahead of EIA report

• WTI hits a fresh weekly low on Thursday and is pressured by a combination of factors.
• Receding fears over potential supply disruptions due to the Israel-Gaza conflict weigh.
• A weaker USD could lend some support ahead of the official EIA US Oil inventory data.

West Texas Intermediary (WTI) Crude Oil prices remain depressed for the third successive day on Thursday and touch a fresh weekly low, the $81.70-$81.65 region during the Asian session.

Concerns about potential supply disruptions due to the Israel-Palestinian clashes receded after Saudi Arabia pledged to help stabilise the market, which, in turn, is seen as a key factor weighing on the black liquid. In fact, the top OPEC producer said that it was working with regional and international partners to prevent an escalation. Moreover, investors remain uncertain about the ultimate impact of the latest geopolitical developments and seem convinced that the expansion of the conflict to the wider Middle East is required to send Crude Oil prices higher.

Meanwhile, the US Energy Information Administration (EIA) lowered its demand growth forecasts for this year and next by 50K bpd and 40K bpd, respectively. Furthermore, the weekly inventory report from the American Petroleum Institute (API) showed that US crude oil stocks possibly rose by nearly 13 million barrels last week. This, along with worries that a global economic slowdown will dent fuel demand, turns out to be another factor undermining the commodity ahead of the official inventory data from the EIA, due for release later this Thursday.

The aforementioned negative factors, to a larger extent, overshadow concerns about tightening global crude supply, which does little to impress bulls or lend any support to Crude Oil prices. That said, the prevalent US Dollar (USD) selling bias – led by reduced bets for further policy tightening by the Federal Reserve, declining US Treasury bond yields and a generally positive risk tone – could limit losses for the US Dollar-denominated commodity. The mixed fundamental backdrop, meanwhile, warrants some caution before placing aggressive directional bets.

Technical levels to watch