WTI clings to gains above $82.00 in countdown to US NFP

• WTI holds gains above $82.00 with US NFP in focus.
• Larger-than-expected drawdown in oil inventories for the week ending June 28 keeps supporting the downside in the Oil price.
• US labor market strength appears to have started easing.

West Texas Intermediate (WTI), futures on NYMEX, steady above $82.00 in Thursday’s European session as month-long rally from June 4 low of $72.45 appears to have stalled for the time-being. The Oil price struggles to extend its upside even though the United States (US) Energy Information Administration (EIA) reported a larger-than-expected drawdown in crude inventories for the week ending June 28.

The agency reported that Oil stockpiles declined by 12.16 million barrels after a build-up of 3.59 million barrels previously. A sharp decline in Oil stockpiles suggests robust demand environment, which is favorable for the Oil price.

The near-term outlook of the Oil price remains firm amid growing speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. The expectations for early Fed rate cuts soar after US ADP Employment data for June indicated that the labor market is losing momentum.

This has also weighed heavily on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides further to near 105.20. Weakness in the US Dollar makes the Oil price an attractive bet for market participants.

The next trigger for the Oil price will be the US Nonfarm Payrolls (NFP) for June, which will be published on Friday. Strong labor demand would ease Fed rate-cut prospects for September while soft figures will boost them.

Meanwhile, concerns over supply chain disruptions remain intact amid tensions in the Middle East region. Also, major U.S. oil and gas platforms are also in Hurricane Beryl's path, which is expected to affect about 73,000 barrels per day of offshore oil production, the ANZ Bank reported.