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• WTI lacks bullish conviction and is influenced by a combination of factors.
• A modest USD recovery and China’s economic woes act as a headwind.
• The mixed setup warrants some caution before placing directional bets.

West Texas Intermediate (WTI) US crude Oil prices build on the previous day's solid rebound from the 50-day Simple Moving Average (SMA) support and climb to a fresh weekly peak during the Asian session on Thursday. The commodity, however, struggles to capitalize on the move and currently trades around the $81.65 region, nearly unchanged for the day.

The US Dollar (USD) attracts some buyers and reverses a part of the previous day's slump to a nearly four-month low, which, in turn, is seen as a key factor acting as a headwind for the USD-denominated Crude Oil prices. Apart from this, signs of slowing economic growth in China – the world's top oil importer – contribute to capping the black liquid. The downside, however, remains cushioned in the wake of a bigger-than-expected weekly drop in US crude stockpiles.

Data published by the Energy Information Administration (EIA) on Wednesday showed a third straight weekly decline in US crude inventories, by 4.9 million barrels compared to a 4.4 million drop reported by the American Petroleum Institute. Moreover, the attempted USD recovery runs the risk of fizzling out rather quickly amid bets that the Federal Reserve (Fed) will cut rates in September. This, in turn, supports prospects for some meaningful upside for Crude Oil prices. 

Even from a technical perspective, failure to find acceptance below the 100-day SMA and the overnight bounce from the 50-day SMA pivotal support suggests that the path of least resistance for the commodity is to the upside. That said, mixed oscillators on the daily chart warrant some caution before confirming that the recent retracement slide from the vicinity of the $84.00 mark, or over a two-month peak touched on July 5 has run its course and positioning for any further gains.

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