Dollar Softness Supports, but Inventory Build Adds Caution
The dollar fell to a 3-1/2-year low on Wednesday, typically supporting crude by making it cheaper for non-dollar buyers.
Traders are watching Thursday’s U.S. non-farm payrolls for clues on potential Fed rate cuts that could spur economic activity and demand.
Late Tuesday, API data showed U.S. crude inventories rose by 680,000 barrels, counter to usual summer drawdowns, adding caution ahead of EIA data due later today.
China Demand and Russian Premiums Offer Underlying Support
China’s factory activity returned to expansion in June, pointing to firm demand from the world’s second-largest oil consumer.
Meanwhile, firm premiums for Russian ESPO Blend crude and expectations of higher Saudi official selling prices for Asia in August add to signs of demand resilience.
EIA Report in Focus with Forecasted 3.5M Barrel Draw
The market will focus on the EIA weekly inventory report due at 14:30 GMT, with forecasts calling for a 3.5 million barrel draw in U.S. crude stocks as seasonal demand picks up.
This follows last week’s larger 5.8 million barrel draw and would confirm continued inventory tightness if realized. A draw near or above expectations could support crude’s hold above the 200-day moving average, while a surprise build could test the market’s resolve ahead of the July 6 OPEC+ meeting.
Market Forecast: Mild Upside Bias While Watching $67.44
With crude holding above its 200-day moving average and a softer dollar providing support, the oil prices forecast holds a mild upside bias near term.
However, the expected OPEC+ supply increase and uneven U.S. inventory trends may limit rallies. Traders will watch $67.44 as the next test while using $65.20 as a pivot for momentum in the sessions ahead.
More Information in our Economic Calendar.
