WTI drops 2% on dollar strength and bearish US inventory report
- WTI drops as Trump's decision to halt stimulus boosts the dollar.
- The US API report released Tuesday showed a bigger inventory build-up.
West Texas Intermediate (WTI), a North American oil benchmark, is operating on slippery grounds, courtesy of a resurgent US dollar and bearish weekly oil inventory figure.
At press time, WTI is trading at $39.84 per barrel, representing a 2% decline on the day. Prices hit a high of $40.86 during the early Asian trading hours.
Dollar bid
The greenback picked up a bid on Tuesday after President Trump tweeted that he had halted negotiations for fiscal stimulus until after the election.
Trump's tweet revived concerns about the US economic recovery losing traction and pushed stocks lower and the greenback higher.
The dollar index, which tracks the greenback's value against majors, rose by over 0.4% to 93.80 and extended gains to 93.90 a few minutes before press time.
Surprise inventory build
Additional bearish pressure for oil could be stemming from the American Petroleum Institute (API) data released Tuesday, which showed an oil inventory build of 951,000 barrels in the week ended Oct. 2 versus analysts' expectations for a build of 400,000 barrels.
The black gold could suffer deeper losses during the day ahead if the risk aversion worsens. At press time, the futures tied to the S&P 500 are down over 0.20% on the day.
Technical levels