WTI struggles for direction, holds steady below $65
- WTI struggled to capitalize on the previous session's goodish rebound from multi-day lows.
- Suspension of the COVID-19 vaccine in Europe raised doubts about fuel demand recovery.
- Investors also preferred to wait on the sidelines ahead of the latest FOCM policy decision.
West Texas Intermediate (WTI) crude struggled to capitalize on the previous day's goodish bounce from four-day lows and witnessed a subdued/range-bounce price action during the Asian session. The commodity was last seen hovering around the $64.80-75 region, nearly unchanged for the day.
The black gold showed some resilience below the $64.00 mark on Tuesday and attracted some dip-buying in reaction to a bullish report by the American Petroleum Institute (API). According to API, US oil inventories unexpectedly fell by 1 million barrels last week as against consensus estimates pointing to a 2.715 million barrel build in stocks.
The supporting factor, however, was offset by concerns that stalled vaccine rollouts in Europe is slowing recovery in the fuel demand. In fact, Spain, Germany, France and Italy became the latest European countries to temporarily suspend the Oxford/AstraZeneca coronavirus vaccine amid reports of possible serious side effects.
Apart from this, the underlying bullish sentiment surrounding the US dollar was seen as another factor holding traders from placing bullish bets around dollar-denominated commodities, including oil. The greenback remained well supported by the upbeat US economic outlook, bolstered by the passage of a massive US stimulus package.
Meanwhile, investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of Wednesday's key event risk – the FOMC monetary policy decision. The Fed is widely expected to leave monetary policy setting unchanged and hence, the focus will be on the central bank's response to the recent surge in bond yields.
Technical levels to watch