WTI weighed by China woes and a firm US Dollar

• WTI is under pressure as US Dollar firms are on good news for the banking sector. 
• China falls below contraction territory, weighing on oil.

West Texas Intermediate crude oil prices Monday lower and have traveled between a low of $74.58 and $76.65 so far.

The US Dollar index on Monday reached a to a 1-1/2 week high and has weighed on the price of commodities, including Oil while US data and Chinese data have been the focus to start the week. At the same time, the US Dollar has found a boost as investors digested news of JPMorgan Chase's takeover of First Republic Bank, ahead of Wednesday's policy decision by the US Federal Reserve.  

JPMorgan Chase has bought failed First Republic Bank's deposits and a "substantial amount of their assets and certain liabilities," JPMorgan Chase said in a press release Monday.

"Our government invited us and others to step up, and we did," JPMorgan Chase CEO Jamie Dimon said in a statement. "This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise."

In the Chinese economic news, the concerns have hit oil prices as China's April manufacturing and non-manufacturing activity slowed more than expected. The China Apr manufacturing PMI dropped -2.7 to a 4-month low of 49.2, weaker than expectations of 51.4. Also, the Apr non-manufacturing PMI fell -1.8 to 56.4, weaker than expectations of 57.0.

On the other side of the Pacific, the April ISM manufacturing index rose +0.8 to 46.1, stronger than expectations of 46.8. Also, Mar construction spending rose +0.3% MoM, stronger than expectations of +0.1% MoM and the largest increase in 4 months.

Specific to the industry, Reuters reported that last Wednesday's EIA report showed that (1) U.S. crude oil inventories as of April 21 were -0.5% below the seasonal 5-year average, (2) gasoline inventories were -7.2% below the seasonal 5-year average, and (3) distillate inventories were -12.4% below the 5-year seasonal average. U.S. crude oil production in the week ended April 21 fell -0.8% w/w to 12.2 million bpd, only 0.9 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.

Meanwhile, the Baker Hughes reported last Friday that active US oil rigs in the week ended April 28 were unchanged at 591 rigs, moderately below the 2-1/2 year high of 627 rigs posted on December 2. US active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in US crude oil production capacity.

Speculators have started to unwind their long exposure in WTI crude oil, while also adding short positions, analysts at TD Securities explained.

´´Despite the latest inventory statistics which continue to show robust product demand and dwindling inventories, crude markets were rocked by the reemergence of recessionary fears and bank liquidity concerns.´´

´´Prices have since collapsed, seeing the entirety of the OPEC+ driven rally reversed. But, as risk appetite stabilizes and fundamentals continue to look tighter in the second half of the year, CTAs could again turn buyers and offer support to crude oil markets in the coming weeks,´´ the analysts concluded.