After Volatile Day, WTI Crude Oil Recovers To $71.00; Middle East news
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Salma Hossein
- . June 9, 2023
- . Update: June 9, 2023 9:31 pm
WTI crude oil prices increase bids early on Friday to offset the largest daily loss in a week. In doing so, the black gold supports the weak US Dollar and recent headlines involving Saudi Arabia in order to reverse the previous day’s sharp decline before China releases its headline inflation data.
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However, Saudi Crown Prince Mohammed bin Salman recently threatened to sabotage US-Saudi relations if Washington retaliated against the output cut policy, according to recent news published by the Washington Post. The same support the buyers of energy by joining the sluggish US Dollar Index (DXY) at around 103.30 after falling the most in two months the previous day.
The WTI prices have previously been drowned by rumors that the US and Iran have signed a nuclear deal and that the deal will enable Iran to overcome the Oil sanctions. Such claims were later refuted by the White House, which caused the commodity to rebound from its weekly low.
The US Dollar was hurt elsewhere by negative US data, but the energy benchmark is also supported by positive sentiment in China, one of the world’s largest consumers of commodities.
On Thursday, US initial claims for unemployment increased to 261K for the week ending June 2 compared to the 235K forecast and 233K prior (revised). As a result, the four-week average increased from previous readings of 229.75K to 237.25K. Additionally, Continuing Jobless Claims decreased from 1.794M the week before (revised) to 1.757M in the week ending May 26, which was below market expectations of 1.8M. The US ISM Services PMI, S&P Global PMIs, and Factory Orders all published negative results earlier in the week, rebuffing the Fed doves and depressing the US Dollar.
The Industrial and Commercial Bank of China, the Bank of China, and the Construction Bank, on the other hand, all reduced their benchmark rates. The People’s Bank of China (PBOC), the central bank of the Dragon Nation, may also cut interest rates as a result of this, which fuels expectations of increased credit creation and Chinese oil demand.
The WTI bulls also benefited from concerns about Chinese market intervention, as PBoC Vice Governor stated, “We have confidence, conditions, and capacity to maintain stable operations of the FX market.” Director of China’s National Administration of Financial Regulation Li Yunze also expressed optimism about the Chinese economy, saying, “Economy still recovering,” and adding that demand will be increased.
Even though Wall Street closed with gains, the S&P500 Futures struggle to find a clear direction amidst these plays.
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Given that China is one of the biggest consumers of oil, the Consumer Price Index (CPI) and Producer Price Index (PPI), which measure inflation for May, will receive a lot of attention in the future. According to the forecast, the headline CPI will rise to 0.3% YoY in May from 0.1% previously, while the PPI may fall even further to -4.3% YoY from -3.6% earlier readings. The WTI traders will be on the lookout for any surprises for a significant reaction given the mixed outlook.
**The buyers of oil remain optimistic due to frequent bounces off the $71.00 support level of the 10-DMA.
