Crude oil prices fell more than two percent on Wednesday as the U.S. government cut sharply in a set of labor data closely watched by investors.
West Texas Intermediate (WTI), the benchmark for U.S. crude, traded around $71.70 on Thursday. WTI prices fell as fears of a major war in the Middle East eased.
However, stronger expectations for a rate cut by the Federal Reserve (Fed) in September after the FOMC meeting could moderate the decline. The agency’s estimate of total employment for the period April 2023 to March 2024 fell by 818,000.
The revised jobs data offset support from a drop in U.S. oil inventories, and recently released minutes from the Federal Reserve indicating a likely September rate cut.
U.S. crude stocks, gasoline and distillate inventories fell in the week ending Aug. 16, the Energy Information Administration (EIA) said on Wednesday.
Crude inventories fell by 4.6 million barrels to 426 million barrels in the week, the EIA said, exceeding analysts’ expectations in a Reuters poll for a 2.7-million-barrel draw.
Fed officials last month were strongly leaning toward an interest rate cut at their September policy meeting, and several would have been willing to reduce borrowing costs immediately, according to the minutes of the July 30-31 gathering.
Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.
Meanwhile, investors’ worries persisted over the prospect of economic weakness in China weighing on the country’s crude demand.
China’s economic struggles have contributed to weak processing margins and low fuel demand that has curbed operations at state-run and independent refineries.
Elsewhere, a Greek-flagged oil tanker was adrift in the Red Sea on Wednesday after repeated attacks that started a fire on the vessel and caused the ship to lose power, the UK maritime agency said.
Iran-aligned Houthi militants have launched a series of attacks on international shipping near Yemen since last November in solidarity with Palestinians in the war between Israel and Hamas.
The Red Sea leading to the Suez Canal is a key shipping route for oil, and sustained attacks pose a potential threat to global crude flows.
Meanwhile, U.S. President Joe Biden planned to talk by phone with Israeli Prime Minister Benjamin Netanyahu on Wednesday about ways to keep a potential Gaza ceasefire and hostages deal alive, a U.S. official said. The call follows U.S. Secretary of State Antony Blinken’s whirlwind trip to the Middle East that ended on Tuesday without an agreement between Israel and Hamas militants on a truce in the Palestinian enclave
Technical Outlook : Crude Oil Futures
The Crude oil prices witnessed over 2% fall. Prices touched an intraday low 6020 and settled at 6030 compared to previous day’s close of 6154.00.
Since last week, pair has been turned negative from the peak of 6736 and dropped to the low of 6020. While, it forming a lower low candle stick formation which is indicating for a strong selling pressure in the prices.
Now, the prices is trading on a verge of decisive support level 5972 a break below is expect to extend fall towards 5860-5780. Else, prices may consolidate above it before next further big move.
On the upside, immediate resistance is seen at 6132 a break above 6248-6355.
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Commodity Samachar
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