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WTI (NYMEX futures) is inching closer towards two-month highs of $82.47 reached earlier this week, staging an impressive comeback from a drop to just under $81 area.
The ongoing downbeat momentum in the US dollar is seemingly boding well for the black gold. Although it could turn out to be a ‘sell the rally’ trading in the US oil amid looming risks from the world’s second-largest oil consumer.
Markets are bracing for an imminent release of crude reserves from China. Reuters reported earlier on, China plans to release its strategic petroleum reserves (SPR) around the Lunar New Year holiday as part of a plan coordinated by the US with other major consumers to stem the price rise.
The latest Customs data showing that China posted its first annual drop in crude oil shipments in two decades in 2021 could likely weigh on the sentiment around WTI.
Additionally, the Chinese authorities have asked people not to travel during the Lunar New Year holiday break, in an effort to contain the Omicron covid variant contagion. Investors believe the Chinese restrictions could dent the demand for fuel, which could render oil-negative.
The focus now shifts towards the US weekly rigs count and Retail Sales data due to be released later this Friday for fresh trading opportunities in WTI.