The benchmark West Texas Intermediate (WTI) attracted fresh buyers in Asian trading on Wednesday and reversed a part of the previous day’s retracement slide from the $81.65 area, or a nearly two-month top.
The US crude oil currently trades around $81.00/barrel, up over 0.50% for the day amid persistent geopolitical tensions stemming from Israeli strikes on Gaza and Ukrainian attacks on Russian refineries.
Russia’s Foreign Ministry summoned US Ambassador Lynne Tracy earlier this week and blamed the US for a “barbaric attack” in Crimea and said that retaliatory measures would “definitely follow”.
Furthermore, the risk of an all-out war between Israel and Lebanon remains alive in the wake of soaring tensions on provocations by Hezbollah, fueling concerns about supply disruptions from the key oil producing countries.
This, in turn, is seen as a key factor acting as a tailwind for the black gold, though worries about weaker demand in the top oil consuming nation might keep a lid on any further gains.
Data from the American Petroleum Institute showed on Tuesday that US oil inventories unexpectedly rose by 914,000 barrels in the week to June 21.
Moreover, a jump in US gasoline stocks last week suggested a weak start to the summer driving season.
Meanwhile, a fall in the US Consumer Confidence in June added to worries about the economic outlook. This, along with a modest US dollar strength, bolstered by the recent hawkish remarks by influential FOMC members, as well as uncertainty about the likely timing of when the Federal Reserve will start cutting rates, might contribute to capping crude oil prices.
Market participants now look forward to the official US government data on oil and fuel stockpiles, which is due for release later Wednesday.
The focus, however, will remain squarely on the final US Q1 GDP print on Thursday and the US Personal Consumption Expenditures (PCE) Price Index on Friday. The latter will influence the Fed’s future policy decision, which, in turn, will drive the USD demand in the near term and provide some meaningful impetus to Crude Oil prices.
(Source: OANDA)
