Fx News

WTI pares intraday losses above $71.00 amid economic jitters, EIA Crude Oil Stocks Change eyed

WTI crude oil prices remain depressed and have experienced a second consecutive day of decline. The market is currently grappling with sluggish conditions and concerns over a potential banking crisis, which have supported a rebound in the US Dollar despite expectations of future actions by the Federal Reserve weighing on the greenback.

Mixed signals from recent trade numbers in China for May have also impacted risk appetite. Additionally, softer economic statistics from the US, China, and the Eurozone have renewed fears of an economic slowdown. The Bank of Japan’s potential higher rates and hawkish performances by the Reserve Bank of Australia and Reserve Bank of New Zealand have further dampened economic optimism.

Previously, WTI crude oil prices had been supported by Saudi Arabia and OPEC+ pledging to deepen oil production cuts, along with a surprise draw in weekly inventories. The American Petroleum Institute (API) reported a drop of 1.71 million barrels in crude oil stockpiles for the week ending June 2, contrasting with the previous addition of 5.20 million barrels.

Moreover, comments from the US Energy Information Administration (EIA) suggesting a faster rise in US crude oil production and a cooling of demand growth compared to prior expectations have weighed on oil prices.

With a lack of major data and absence of Federal Reserve talks, the US Dollar Index (DXY) has seen a rebound, further pressuring WTI crude oil.

Looking ahead, energy traders will likely focus on the weekly oil inventory data from the US Energy Information Administration (EIA) for clearer market direction. Expectations are for a reduction in inventory build, with a projected figure of 1.5 million barrels for the week ending June 2, compared to the previous reading of 4.488 million barrels.

In addition to the stockpile data, market participants will closely monitor risk catalysts and economic growth signals for further insights into the direction of WTI crude oil.

From a technical analysis perspective, the failure to surpass the 50-day Exponential Moving Average (EMA) around $73.40 has directed WTI crude oil prices toward the one-month-old ascending support line, which is currently near $67.85.

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