Commodity
Despite a significant reduction in US oil inventories, WTI remains above $81.00
31 Aug 2023
5 minutes

WTI crude oil's trajectory remains uncertain as it hovers around the $81.30–40 range in preparation for the European session on Thursday. This pause puts an end to a two-day winning streak, resulting in slight losses. This reflects the cautious sentiment in the market as traders await crucial indicators of US inflation and employment trends. Notably, the market seems to be disregarding the substantial reduction in inventories and concerns about supply disruptions stemming from Hurricane Idalia.


The official data source for US crude oil inventories, the Energy Information Administration (EIA), reported the most significant decrease in four weeks, following the report by the American Petroleum Institute (API) which indicated the most substantial drop since September 2016.


Furthermore, there are hopes among WTI crude oil buyers due to worries about supply shortages and increased energy demand due to Hurricane Idalia impacting the Gulf Coast of Florida and Typhoon Saola affecting China, particularly Hong Kong and the manufacturing centers in Guangdong province.


Conversely, the S&P 500 Futures are struggling to replicate the gains seen on Wall Street, reflecting a cautious atmosphere before the release of key US data. Simultaneously, the yield of the benchmark US 10-year Treasury bond remains under pressure, reaching its lowest point in three weeks at approximately 4.11%.


It's worth noting that previously, WTI crude oil was buoyed by a weakening US Dollar and the prospect of major central banks, including the Federal Reserve, potentially ending their hawkish stance sooner than expected. However, mixed early-day data from China has stimulated interest among oil buyers in advance of significant US economic statistics.


To elaborate, China's official NBS Manufacturing PMI for August surpassed expectations at 49.7, compared to the projected 49.4 and the previous reading of 49.3. In parallel, the Non-Manufacturing PMI came in at 51.0, slightly lower than the 51.5 prior reading and the market's anticipated 51.1.

Source: https://www.fxstreet.com/news/wti-struggles-above-8100-despite-huge-us-oil-inventory-draw-fears-from-hurricane-idalia-saola-202308310501
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