WTI: Bulls touch $98.00 as DXY renews three-week low ahead of US GDP.

• WTI buyers hold the reins for two bullish days amid mixed concerns.
• Fed-inspired dollar weakness favors oil buyers, but recession fears defy upside moves.
• Headlines suggesting the release of Russian and US oil reserves could entertain traders ahead of the US 2Q GDP.

WTI Crude Oil prices remain firm around $98.00 during Thursday morning in Europe.

Thus, black gold rises for the second consecutive day, while benefiting from the softness of the US dollar. However, fears of an economic slowdown seem to defy commodity bulls.

That said, the Dollar index (DXY) falls to the lowest levels since July 5 while taking offers near 106.05, down 0.30% intraday. The previous day, the dollar gauge posted the biggest drop in six weeks, after the US Federal Reserve (Fed) disappointed dollar bulls.

The Fed matched market forecasts by announcing a 75 basis point rate hike. The underlying reason for the pair’s weakness could be attributed to the Fed Chairman’s speech, Jerome Powellwho commented that there will be no more orientation guide, as well as that the fees will be decided meeting by meeting.

It is worth noting that the inversion of the US Treasury yield curve softened just after the Fed but continues to signal fears of the economic slowdown of late. 10-year US Treasury yields fell by nearly four basis points (bps) to 2.78%, while 2-year Treasury yields tumbled 2.58% to 2.98% after a 0.75% rate hike from the Fed. Even so, the gap between the main bond coupons remains the widest since 2000 and, in turn, is an indication of the problems of the US recession. It should be noted that the 10-year yield has pared recent losses around 2.80% and is also still under pressure around 3.00% at press time.

On the other hand, the drop in crude oil inventories in the US was coupled with fears of a further reduction in Russian energy exports to Europe to favor buyers of raw materials.

“US crude oil stockpiles fell 4.5 million barrels last week as exports hit an all-time high due to US crude being heavily discounted to Brent, the international benchmark, according to the Energy Information Administration,” according to Reuters.

On Wednesday, gas flows through the Nord Stream 1 pipeline fell to a fifth of the pipeline’s capacity, while Italy’s Eni said it will receive smaller volumes from Russia’s Gazprom, Reuters reports.

Elsewhere, updates from the virtual meeting between US President Joe Biden and his Chinese counterpart Xi Jinping will add to recession fears to entertain AUD/USD intraday traders. However, most attention will be focused on preliminary US second quarter Gross Domestic Product (GDP) readings amid recession fears.

WTI Technical Analysis

A descending resistance line from Jul 08 joins the 21 DMA to restrain short-term WTI gains around $98.50. However, pullback moves remain difficult until the pair sustains above an uptrend line from a fortnight ago at $94.30 at press time.