WTI remains depressed below $73.00, looks vulnerable to two-week low

• WTI is struggling to gain traction and is languishing near a two-week low hit on Tuesday.
• A surprise rise in US crude inventories and easing tensions in the Middle East weigh on oil prices.
• China’s economic woes are keeping bulls on edge and acting as a headwind for the commodity.

West Texas Intermediate (WTI) US crude oil prices are trading slightly downtrend below the $73.00 mark during the Asian session on Wednesday and remain within striking distance of the two-week low hit the previous day.

Concerns about supply disruptions in the Middle East eased after US Secretary of State Antony Blinken said on Monday that Israeli Prime Minister Benjamin Netanyahu had accepted a proposal to address disagreements blocking the Gaza ceasefire agreement. Apart from that, a surprise increase in US crude inventories continues to weigh on crude oil prices.

U.S. crude inventories rose by 347,000 barrels in the week ended Aug. 16, according to American Petroleum Institute figures released Tuesday, pointing to an oversupply in the world’s biggest oil consumer. This comes on top of concerns about a slowdown in China – the world’s biggest oil importer – and continues to act as a headwind for the commodity.

Meanwhile, investors remain concerned about ongoing clashes between Israel and Hamas, despite ongoing ceasefire negotiations. In addition, Hamas said the US-backed link proposal submitted at the end of Doha talks on Friday was a reversal from what the sides agreed to in early July, keeping investors on their toes.

Apart from this, the prevailing selling trend in the US dollar (USD), fueled by growing acceptance that the Federal Reserve (Fed) will begin its rate-cutting cycle in September, could support crude oil prices and help limit subsequent losses. Traders now look to official inventory data from the US Energy Information Administration (EIA) later today.

The focus, however, remains on geopolitical developments and the publication of the minutes of the July FOMC meeting. The latter, along with Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday, should provide clues about the path of US central bank policy. This, in turn, will drive the USD and provide further impetus to crude oil prices.