WTI flirts with weekly trough, remains depressed below mid-$80.00s

• WTI drifts lower for the third straight day amid hopes for a ceasefire in Gaza.
• Expectations for tightening global supply should help limit any further losses.
• The fundamental backdrop warrants caution for aggressive bearish traders.

West Texas Intermediate (WTI) US Crude Oil prices remain under some selling pressure for the third successive day on Friday and trades near the weekly low, around the $80.30 region during the Asian session.

US Secretary of State Antony Blinken said that gaps are narrowing in the ongoing talks aimed at reaching a ceasefire in Gaza and the release of hostages, easing concerns about supply disruptions in the Middle East. This, along with some follow-through US Dollar (USD) buying, bolstered by the optimistic US economic outlook, turn out to be key factors exerting downward pressure on USD-denominated commodities, including Crude Oil prices. The downside, however, seems cushioned in the wake of worries about tightening global supply.

Ukrainian drone strikes on Russian oil refineries could lead to lower fuel production by the latter. This comes on top of the OPEC+ members’ decision to extend the production cuts of 2.2 million barrels per day through the second quarter and the International Energy Agency’s upward revision of the 2024 oil demand growth. Furthermore, a stronger US economy and a potential recovery in China add to expectations of tighter supplies. This could act as a tailwind for Crude Oil prices and warrants some caution for bearish traders.