WTI bulls approach $78.00 as fears of higher Oil supplies jostle with China recovery hopes
- WTI crude oil rises for the second consecutive day, renews intraday high of late.
- Strong China PMI data bolster upbeat expectations from the world’s largest commodity user.
- Higher OPEC+ supplies, talks of more Russian Oil floating un-bid challenge WTI bulls.
- Fears of higher rates, inflation also keep a tab on energy benchmark ahead of US PMIs, official Oil inventories.
WTI crude oil renews its intraday high around $77.60 during the initial hour of Wednesday’s European session.
In doing so, the black gold marks another attempt to regain the $78.00 after the previous day’s pullback from a one-week high.
That said, the energy benchmark’s previous pullback could be linked to the US Dollar’s run-up amid hawkish Fed bets, as well as inflation fears, while the fears of more Oil supplies joined the force to challenge the commodity bulls afterward.
It’s worth mentioning that talks of higher supplies from the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, despite binding to the output cut commitments, exert downside pressure on the black gold price. On the same line could be the news shared via Bloomberg that says, “As many as 1.9 million barrels of Russian diesel-type fuel is currently in floating storage, the most since October 2020.” The news also mentioned that this phenomenon indicates some cargoes loaded from Russian ports without buyers.
It should be noted, however, that the mixed US data and strong prints of China’s Caixin and NBS Manufacturing PMIs for February, as well as the Non-Manufacturing PMI for the said month, pushes back the hawkish Fed concerns and favor hopes of more demand from the world’s biggest commodity user.
Looking ahead, the US S&P Global and ISM PMI details for February will be important for immediate directions ahead of the weekly official Oil inventory data from the US Energy Information Administration (EIA).
Technical analysis
A clear upside break of the 12-day-old descending trend line, previous resistance around $76.65, directs WTI crude oil buyers toward the 50-DMA hurdle of $78.00.