WTI crude oil pares the biggest daily loss in six weeks above $74.00 with eyes on US GDP
- WTI crude oil portrays corrective bounce at four-week low.
- US Dollar rebound, recession woes drowned the black gold previously despite higher inventory draw.
- US GDP, risk catalysts eyed for clear directions amid bearish concerns about energy benchmark.
WTI crude oil licks its wounds at a monthly low surrounding $74.00, mildly bid near $74.45 heading into Thursday’s European session, as markets brace for the US first quarter (Q1) Gross Domestic Product (GDP). In doing so, the black gold snaps a two-day downtrend while consolidating the biggest daily loss in 1.5 months.
That said, the energy benchmark’s latest rebound could be linked to the downbeat US Dollar and cautious optimism in the market. However, anxiety ahead of the key US data prods the Oil buyers.
The energy benchmark’s previous day’s fall could be linked to the US Dollar’s corrective bounce off the lowest levels in two weeks, as well as the risk-off mood in the market. It’s worth noting that the quote’s weakness ignored price-positive stockpile data from the US Energy Information Administration (EIA), as well as from the industry source American Petroleum Institute (API).
It should be noted that the recent concerns surrounding the US-China tussle and Russia’s hard stand appear challenging the Oil bears. Earlier in the day, China’s Industrial Profits also improved and allowed WTI to pause the previous downside.
That said, comments from US Commerce Secretary Gina Raimondo renewed fears about the geopolitical tension among the world’s top two economies. “Chinese cloud computing companies like Huawei Cloud and Alibaba Cloud could pose a threat to US security,’ Said US Commerce Secretary Raimondo per Reuters. The policymaker also vowed to review a request to add them to an export control list reported the news.
Elsewhere, Russian Deputy Prime Minister Alexander Novak shrugged off challenges to Moscow due to Western sanctions and energy price caps on Wednesday. The policymaker also praised OPEC+ as he said, “Without OPEC and its allies (OPEC+), there are risks to energy security.”
On a different page, upbeat earnings from Microsoft and Google’s parent Alphabet Inc. allowed Nasdaq to remain firmer. However, the escalating fears from the First Republic Bank (FRB), due to another 20% share price fall on Wednesday following a 50% slump the previous day, weigh on the sentiment and prod the Oil buyers.
Against this backdrop, the US stock futures print mild gains and the US Dollar Index, as well as the US Treasury bond yields, grind lower.
Looking forward, recession woes highlight today’s US Q1 GDP figures and hence any negative surprise could weigh on the WTI crude oil price.
Technical analysis
A clear downside break of 100-DMA keeps WTI crude oil bears hopeful of revisiting February’s low of $72.50.