WTI battles $43.00 ahead of key PMIs, Baker Hughes data

• WTI buyers attack $43.00 following a brief break from the strong recoveries from $41.68.
• Mixed sentiment, lack of major catalysts challenge the bulls.
• Cautious mood ahead of the preliminary activity numbers from global leaders also play their role.

WTI refreshes intraday high to $42.90 ahead of Friday’s Tokyo open. The energy benchmark recently gained bids following its choppy trading between $42.60 and $42.90 challenged the US session run-up from $41.68.

All eyes on PMIs…

Despite a battle between mixed PMI numbers from Australia’s Commonwealth Bank and a five-week low coronavirus (COVID-19) new cases from Victoria, not to forget the fears of a wider virus wave 2.0 in the US and delay in much-awaited stimulus, the oil prices remain firm. The reason could be traced from the market’s hope of demand recovery following further activity in August despite looming virus woes.

On Thursday, Organization of the Petroleum Exporting Countries (OPEC) in its allies, the group is known as OPEC+ said, as per Reuters, “OPEC+ sees an alternative scenario where stronger, more prolonged second virus wave in H2 2020 leads to lower economic recovery and weaker oil demand." The news additionally revealed, "OPEC+ alternative scenario sees demand falling by 11.2 million BPD in 2020, sending Q4 OECD commercial oil stocks to 233 million barrels above the 5-year average."

It should be noted that the US House Speaker Nancy Pelosi recently took a U-turn from her previous comments favoring the early talks over the COVID-19 relief bill. The Democrat said, “Timing is not right for a smaller coronavirus relief bill.”

Amid all these catalysts, the market’s risk-tone remains mildly positive with the S&P 500 Futures adding 0.20% to 3,387 by the press time.

Looking forward, Markit PMIs from the US will be the key while Japan’s Jibun Bank Manufacturing PMI can offer nearby direction. Furthermore, the weekly release of Baker Hughes US Oil Rig Count, prior 172, will also be important to watch.

Read: Markit PMI August Preview: Did the economy improve in August?

Technical analysis

Other than the $43.00 immediate resistance, a downward sloping trend line from August 05, at $43.20 now, will also be important to watch before targeting the monthly top near $43.65 and February’s low near $44.00. Meanwhile, an ascending trend line from June 15, currently around $41.35, will be the strong support to watch during the quote’s fresh downside.