Oil inter-markets: Will the bounce last post-US data?

Oil paused its retreat from multi-week lows and now stages a minor-recovery attempt in the European hours, in wake of several supportive fundamental factors.

Oil prices found support from persisting political instability in Venezuela, with escalating protests in the country against the rule of President Nicolas Maduro. Moreover, the unexpected drawdown in the crude inventories combined with stronger Asian demand, also aid the recovery in the commodity.

While looking towards the intrinsics, the ongoing recovery in the prices can be partly attributed to a major turnaround in the risk conditions, with risk-on back in vogue as reflected by rising treasury yields and a steep drop in the VIX (CBOE Volatility Index), fear gauge, down 2% so far.

However, it remains to be seen whether the black gold sustains the recovery on the release of US macro news, including the durable goods data, which is likely to have a significant impact on the USD-sensitive oil. A stronger USD makes dollar denominated commodity expensive for the holders in foreign currencies and vice-versa.