Oil inter-markets: tepid recovery in-line with improvement in global risk sentiment

After being slammed to a two-month low level of $44.51, WTI crude oil has managed to recover swiftly and jumped back to nearly retest its previous strong support turned immediate resistance near $45.75-80 region. 

Concerns of a renewed global supply glut, led by lower-than-expected drop in US crude inventories and aggravated by rise in US rig counts (Baker Huges report), has been the key factor behind last week's sharp slide in crude oil prices. Adding to this, impressive Friday's spectacular jobs report for June provided an additional boost to the US Dollar, as measured by the overall US Dollar Index (DXY), and weighed down on dollar-denominated commodities - like oil. 

The commodity's latest leg of recovery was led by a slide in DXY and was further supported by a risk-on rally in equity markets as depicted by a surge in the broader US equity index (S&P 500) that touched its all-time high level on Monday. Moreover, a continuous slide in the Volatility Index (VIX) is further supportive for global risk-on sentiment and assisting riskier assets - like equities and commodities, including oil. 

The black gold staged a turnaround during late European trading session and extended the momentum during early NA trading session. However, a tepid recovery in US 10-years treasury yield still points to prevailing cautious approach in the market, which seems to restrict further recovery for the commodity. 

Going forward, the commodity's near-term movement remains pegged to the overall sentiment surrounding the US Dollar and riskier assets with focus now shifts to economic releases from world's largest consumer of commodities, China, that includes - trade balance data and quarterly GDP release on Wednesday and Friday respectively.