WTI back above $75.00 post-US Retail Sales data

WTI has recovered over 2% gains, reaching a high near $75.70, following weak retail sales data from the US. The weaker US dollar and dovish bets on the Fed have favored oil prices. Retail sales in the US climbed by 0.2% in June, less than predicted and 0.5% seen in May.

The Retail Sales Control Group, which reflects overall industry sales used to calculate Personal Consumer Expenditures, increased by 0.6% in June. US Treasury yields are falling, suggesting a less aggressive Fed.

The 2-year yield plummeted to 4.70%, while the 5- and 10-year rates decreased by more than 0.50% to 3.95% and 3.75%, respectively. Oil prices were able to increase due to anticipation of lower rates, which are often linked to a better economy. However, investors have essentially priced in a 25 basis point increase at the upcoming July 26 meeting, while the likelihood of an increase in 2023 has decreased to about 20% due to recent data that has weakened the US dollar over the past sessions.

On the downside, the sluggish economic situation of China, the world’s biggest oil importer, may limit WTI’s upside. The Chinese Gross Domestic Product and Retail Sales expanded but below expectations, so weaker Chinese oil demand may apply selling pressure to the black gold. Investors will closely watch American Petroleum Institute (API) weekly crude oil stocks for the rest of the session.