WTI crude oil bounces off weekly low towards $89.00 on geopolitics, API inventory data
- WTI pares recent losses after a two-day downtrend refreshed weekly bottom.
- Concerns surrounding Abu Dhabi, Russia joined hopes of overcoming virus woes to trigger the rebound in oil prices.
- API Weekly Crude Oil Stock rose dropped below -1.645M prior.
- EIA inventories, risk catalysts will be watched for fresh clues.
WTI crude oil sellers lick their wounds near $88.70 by the end of Tuesday’s settlement, recently bounced off weekly low.
The black gold’s weakness over the last two days could be considered as profit booking moves near the multi-day high, as well as recent trade tussles between the US and China. However, surprise draw in the industry reports of oil stockpile joins escalating fears of Moscow’s attack on Ukraine to underpin the commodity’s latest rebound. On the same line were headlines conveying an explosion in Abu Dhabi and cautious optimism conveyed by US Centers for Disease Control and Prevention (CDC) Director Dr. Rochelle Walensky.
Weekly Crude Oil Stock by the American Petroleum Institute (API) dropped to -2.025M versus -1.645M previous readouts for the week ended on February 04.
Elsewhere, concerns over one or two rocket-fired explosions in Abu Dhabi also helped oil prices to recover before the blast was termed as cylinder-blast by local media.
On the same line were hopes of witnessing easy covid infections by US CDC Director Walensky while extending the mask mandate. “Walensky said she is ‘cautiously optimistic’ COVID-19 cases in the United States will fall below crisis levels, ‘I don't think we're there right now,’” said Reuters.
Furthermore, the US and the UK stay firm to take harsh measures on Russia if it invades Ukraine but Moscow isn’t stepping back. US President Joe Biden will talk to French leader Emmanuel Macron on Wednesday over the issue.
It should be noted that the fears of the Fed’s faster rate hike and cautious mood ahead of the US Consumer Price Index (CPI) also challenged oil prices but firmer equities and gold defended bulls of late.
Moving on, official oil inventory data from the US Energy Information Administration, expected 0.647M versus -1.047M, will be important for the WTI crude oil prices. However, major attention will be given to risk catalysts for fresh impulse.
Technical analysis
WTI crude oil takes a U-turn from a five-week-old ascending trend line, backed by RSI’s pullback from overbought territory, which in turn suggests the oil benchmark’s run-up to regain the $90.00 threshold.