WTI REBOUND APPEARS ELUSIVE AS CHINA INFLATION, US EMPLOYMENT CLUES PROBE OIL DEMAND HOPES

WTI clings to mild gains around intraday high, snaps two-day downtrend.

US Dollar retreat, upbeat Oil inventories seem to underpin WTI’s corrective bounce.

Downbeat China inflation, upbeat signals of US jobs join proposed increase in US taxes on rich to probe Oil buyers.

Friday’s US employment data becomes the key to clear directions.

WTI crude oil grinds near the intraday high of $76.86 during the first profit-making day in three amid early Thursday. In doing so, the black gold cheers the broad based US Dollar retreat and upbeat Oil inventory data. However, downbeat inflation from China and fears of hawkish monetary policies prod the commodity buyers.

US Dollar Index (DXY) snaps two-day uptrend while easing from the highest levels since December 01, 2022, down 0.13% intraday near 105.55 by the press time, as markets brace for Friday’s key employment data amid mixed US statistics.

On Wednesday, the US ADP Employment Change rose to 242K in February versus 200K market forecasts and 119K prior (revised). Further, the US Goods and Services Trade Balance dropped to $-68.3B from the $-67.2B previous reading (revised) and $-68.9B analysts’ estimations. It should be noted that the US JOLTS Job Openings for January improved to 10.824M versus 10.6M expected but eased from 11.234M revised prior.

It should be noted that the WTI crude oil’s official inventory data from the US Energy Information Administration (EIA) traced the industry stockpile report from the American Petroleum Institute (API) while posting a draw in the stocks during the week ended on March 03.

Elsewhere, disappointment from China’s inflation data also dims the prospects of recovery in the world’s second-largest economy and weighs on the risk profile. On the same line could be the fears of higher taxes in the world’s biggest economy, the US, as well as the political chaos relating to it as US President Joe Biden proposes raising corporation tax from 21% to 28% in his latest budget guide ahead of Friday’s release.

Amid these plays, the S&P 500 Futures struggles for clear directions after bouncing off a one-week low the previous day. Further, the US 10-year Treasury bond yields rise to 3.99%, up one basis point (bp), whereas the two-year counterpart pares intraday losses near 5.05% at the latest.

US yield curve inversion widened to the highest levels since 1981 and propelled the recession fears on Wednesday. However, an absence surprise in Fed Chair Powell’s Testimony 2.0 and mixed US data seemed to have triggered the US Dollar’s latest pullback.

Moving on, a light calendar may allow the WTI crude oil to pare some of its weekly gains ahead of Friday’s all-important US Nonfarm Payrolls.