WTI holds above $82.00, China’s woes, US Retail Sales eyed

• WTI reclaims the $82.00 mark after retreating from a weekly high of 82.56 in the Asian session.
• Chinese deflation, real estate sector concerns exert pressure on WTI prices.
• The tightening supply could further contribute to upward pressure on WTI prices.
• Oil traders will monitor US Retail Sales, API/EIA oil data.

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $82.00 mark so far on Tuesday. The Chinese real estate sector is concerned, and a stronger USD exerts some selling pressure on the WTI price.

On Monday, the bonds and shares of Country Garden Holdings Co. plummeted after bondholders failed to receive coupon payments on two-dollar notes by the initial deadline, raising concerns that the company will be the next major defaulter. Country Garden’s financial difficulties validate the worst concerns of investors regarding the nation’s extensive real estate market. 

Furthermore, the Chinese inflation data released last week fuels concern about the pace of China’s post-pandemic recovery. The Consumer Price Index (CPI) YoY fell 0.3% in July from 0% prior. This figure indicates the deflation in China. This, in turn, exerts pressure on WTI prices as China is the major oil consumer in the world.

On the other hand, the tightening supply could further contribute to upward pressure on WTI prices. Saudi Arabia announced it would extend its voluntary oil output cut of one million barrels per day (bpd) through September. In the meantime, Russia’s oil exports will also decrease by 300,000 bps in September.

Additionally, the Organisation of Petroleum Exporting Countries (OPEC) and the Energy Information Administration (EIA) showed optimism regarding the global energy market in the second half of the year. Summer air travel, increased oil consumption for power generation, and rising Chinese petrochemical activity are the primary drivers of the IEA’s anticipated 2.2 million bpd demand increase in 2023. OPEC anticipates a 2.44 million bpd increase in production.

OPEC raised its forecast for global economic growth to 2.7% from 2.6% and revised the figure for the following year to 2.6%, citing the fact that growth in the United States, Brazil, and Russia during the first half of 2023 exceeded initial estimates.

Moving on, oil traders will closely watch the US Retail Sales due on Tuesday. The monthly figure is expected to rise from 0.2% to 0.4% in July. Also, the American Petroleum Institute’s (API) Weekly Crude Oil Stock and EIA Crude Oil Stocks for the week ending August 11 will be released on Wednesday and Thursday, respectively. 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 price.