WTI fades bounce off fortnight low around $84.50 as US unveils SPR release plan
- WTI crude oil pares the biggest daily gains in a week, stays sidelined of late.
- US shows readiness to release 15 million barrels of oil from SPR.
- Risk-aversion also challenges commodity’s recovery despite bullish EIA inventories.
- Risk catalysts are the key for fresh impulse as bears try to retake control.
WTI crude oil prices retreat to $84.50 during Thursday’s Asian session, after bouncing off weekly low the previous day.
The black gold’s latest weakness could be linked to the US announcement surrounding the release of the Strategic Petroleum Reserve (SPR). Also weighing on the quote could be the risk-off mood, which underpins the US dollar’s safe-haven demand.
As a part of the announcements, US President Joe Biden said that 15 million barrels of oil will be offered from the Strategic Petroleum Reserve (SPR) - part of a record 180 million-barrel release that began in May, and added the United States is ready to tap reserves again early next year to rein in prices.
On the other hand, UK-inspired risk-on mood faded after the strong inflation in the leading economies renewed fears of recession amid the central bankers’ aggressive stands despite economic slowdown fears. The price pressures in Britain, Eurozone and Canada were mostly nearly multi-month high and the core numbers, as well as services inflation, were firmer enough to push the central banks towards higher rates.
Adding to the risk-off mood, and weighing on WTI prices, were news surrounding China. The dragon nation registered four-month high covid numbers while the US readiness to tie up with Taiwan to co-produce American weapons, per Nikkei, adds to the Sino-American tussles.
In doing so, the black gold ignores weekly prints of stockpile data from the US Energy Information Administration (EIA).
Technical analysis
An eight-day-old resistance line near $84.60 precedes the 21-day EMA level surrounding $85.30 to restrict short-term WTI upside. That said, a six-week-long horizontal support near $81.50 appears a strong downside level to challenge the oil bears.