WTI crude oil floats above $80.00 as US Dollar rebound jostles with supply crunch fears
|- WTI remains sidelined inside a four-day-old trading range, retreats of late.
- Fears emanating from OPEC+ supply cuts, geopolitical fears underpin Oil price strength.
- US Dollar traces recently firmer odds of Fed’s 0.25% rate hike in May after upbeat US NFP.
- Risk catalysts, US inflation and Fed Minutes eyed for clear directions.
WTI crude oil buyers struggle to keep the reins around $80.70 during early Monday as risk-aversion joins hawkish Fed bets to underpin the US Dollar rebound. However, challenges to Oil supplies, mainly emanating from China and OPEC+, seem to keep the black gold buyers hopeful.
US Dollar Index (DXY) snaps a four-day downtrend around 102.25 even as the US Treasury bond yields fail to recover amid recession woes. That said, the US 10-year and two-year Treasury bond yields remain pressured near 3.37% and 3.95% respectively. In doing so, the benchmark bond coupons extend the previous day’s losses and portray the market’s rush toward the risk-safety amid economic slowdown fears.
That said, the recently downbeat US data renew fears of a recession in the world’s largest economy and challenge the energy optimists. However, the upbeat prints of the US Nonfarm Payrolls (NFP) allowed the Fed hawks to return to the table and new calls for the 0.25% rate hike in May. The same puts a floor under the US Dollar prices and prods WTI crude oil buyers.
On the other hand, geopolitical fears surrounding China, mainly after the dragon nation’s military drills near Taiwan, join the last week’s surprise OPEC+ output cut to keep the Oil buyers hopeful.
Elsewhere, China’s readiness to defend the global economy via strong monetary and fiscal easing at home also allows the Oil buyers to remain hopeful amid optimism at the world’s biggest Oil consumers.
Moving on, the Easter Monday holidays in spot markets may restrict Oil moves but the bulls appear to run out of fuel and hence US inflation and Fed Minutes will be watched carefully for the signals of a pullback.
Technical analysis
Despite the latest inaction, the WTI crude oil remains firmer past the 100-DMA support near $76.80. However, a downward-sloping resistance line from December 2022, around $81.70, appears a tough nut to crack for the WTI crude oil buyers.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.