Entering the European session on Thursday, WTI crude oil prices fell for the second consecutive day after hitting a seven-week high, falling 0.50% to close to $79.95/barrel in the session. Oil pared gains amid a rebounding correction in the U.S. dollar and deteriorating market sentiment during its third straight weekly gain.

The U.S. dollar index rose 0.12% to 102.0 intraday, extending its rebound from a two-month low the day before, even though the Fed's recent bets have turned dovish and U.S. data has been poor. The dollar's latest rebound may be related to market fears that the world's largest economy - the US economy is in recession, after the release of US employment data signaled extremely pessimistic.

The rebound of the US dollar and the sluggish oil inventory data have weighed on WTI oil prices. The market is worried about the prospect of economic recession to test the bulls of WTI oil price. However, broad dollar weakness and the respective geopolitical tensions in China and Russia kept bulls looking forward.

U.S.-China tensions over a possible meeting between U.S. House of Representatives Speaker Kevin McCarthy and Taiwan President Tsai Ing-wen also weighed on sentiment, sending the dollar higher. Meanwhile, North Korea issued its latest nuclear warning as the United States and South Korea hold joint military exercises.

The weekly inventory data released by the US Energy Information Administration fell by 3.739 million, while the market forecast was for a decline of 2.329 million, and the previous value fell by 7.489 million. Earlier this week, the American Petroleum Institute (API) also released inventory data for the week ended March 31, showing a drop of 4.346 million, compared with a previous drop of 6.076 million.

Conversely, OPEC+ production cuts and market bets that the Federal Reserve will stay on hold in May could provide support for oil prices.

It should be noted that the release of dismal U.S. economic data earlier this week has reversed the Fed's hawkish outlook.

ADP Employment Change fell to 145K in March from 200K expected and an upwardly revised 260K prior, after US JOLTS job vacancies hit a 19-month low in February. Likewise, the final March S&P Global Composite and Services PMIs were equally weak, with the former falling to 52.3 from a flash reading of 53.3, while the Services PMI fell to 52.6 from an expected 53.8. More importantly, the U.S. ISM Services PMI for the said month added to market pessimism as the indicator fell to 51.2 vs. 54.5 expected and 55.1 previously.

Notably, the CME FedWatch tool puts the probability of the Fed pausing in May at nearly 57.0%.

Reflecting market sentiment, S&P 500 futures fell below a modest decline in U.S. stocks. However, U.S. bond yields remained under pressure and weighed on the dollar. It is worth noting that the 10-year U.S. bond yield has fallen for the past five consecutive days, refreshing a seven-month low on Wednesday, while the two-year Treasury yield also recorded a four-day downward trend, the latest rebound from 3.79% .

Next, secondary U.S. employment data and catalysts could lure WTI oil price investors ahead of Friday's key non-farm payrolls (NFP).

CME's latest crude oil trading data

Taking into account the latest data from the CME Group crude oil futures market, open interest in crude oil rose by about 21,400 contracts on Wednesday, the sixth straight day of gains. Instead, volume fell for the second day in a row, this time by nearly 223,000 contracts.

Oil prices gave up some gains on Wednesday, while open interest rose, suggesting further losses could be in the near term. In this regard, whether WTI crude oil can fill the upward gap on Monday due to the OPEC decision. Against this, the next support lies at $75.68 (March 31 high).

WTI Oil Price Technical Analysis

WTI oil prices are around $81.80, and the four-month resistance line is testing the bulls.

However, only a break below an ascending support line from March 24, last seen above around $79.20, would bring the bears back.

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