WTI dips to a three-week low around $86.95 amid the stronger USD
- WTI loses momentum for the fifth straight day on Tuesday.
- Investors fear the impact of higher interest rates on oil consumption.
- The extension of the production cuts by Saudi Arabia and Russia could boost the WTI prices higher.
- Oil traders await the weekly Crude Oil Stock data, US JOLTS Job Openings due on Tuesday.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $86.95 so far on Tuesday. WTI trades in negative territory for the fifth consecutive day and loses traction to a three-week low as the US Dollar (USD) resumes its upward path and investors worry about the impact of higher interest rates on oil consumption.
Data released on Monday revealed that the US ISM Manufacturing PMI came in at 49.0 in September from 47.6 in the previous reading, above the market consensus of 47.7. This figure showed that business activity in the US manufacturing sector continued to contract. The upbeat US data lifted the USD across to board and exerted some selling pressure on the WTI prices. This figure could convince the Federal Reserve (Fed) for an additional rate hike this year. It's worth noting that higher interest rates raise borrowing costs, which can slow the economy and diminish oil demand.
OPEC oil production grew for the second consecutive month in September, led by Nigeria and Iran, despite ongoing market-supporting oil cuts by Saudi Arabia and Russia. That said, the extension of the production cuts could boost the WTI prices higher.
Oil traders will keep an eye on the US JOLTS Job Openings and the weekly Crude Oil Stock from API and EIA for the week ending of September 29 due on Tuesday. Later this week, the US ISM Services PMI and ADP report will be released on Wednesday. The highlight of the week will be the US Nonfarm Payrolls on Friday. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI prices.