- WTI price is reversing the previous bounce as it falls to test the $101.50 level.
- A firmer dollar and risk aversion flows weigh on higher yielding US oil.
- WTI sellers remain expectant after the dismal monthly report from the IEA.
The WTI (NYMEX futures) is trading under strong selling pressure so far on Thursday, reversing about a quarter of the previous day’s strong gains. At time of writing, the price of crude recovers slightly from daily lows, still down -1.60% on the day.
The new decline in the price of US oil intensified during the last hour, as risk aversion intensified at the start of the European session and hit higher yielding assetslike oil.
The US dollar extended its rise, benefiting from safe-haven money flowswhile the DXY dollar index is trading at its highest level in two decades, near 104.30.
Markets flee risky assets amid growing concern about rising inflation and fears about global economic growthafter a higher-than-expected US CPI reinforced expectations of aggressive Fed tightening. In addition, the supply chain crisis caused by industry closures in China continues to undermine investor confidence.
Besides, the downward revision of the International Energy Agency (IEA) forecasts for world oil demand for 2022 by 70,000 barrels per day helped with renewed selling pressure on black gold. The IEA pointed out that the lockdown in China and high inflation are responsible for the reduction in oil demand projections.
Attention now turns to the open of the American session, where risk aversion is likely to spread, reflected in the 0.50% drop in S&P 500 futures. US dollar keep WTI, denominated in dollars, under pressure.
WTI technical levels
Source: Fx Street
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