• WTI crude oil is rising toward $76, the highest level since May.
• The weaker US inflation data raised hopes for oil traders.
• The renewed tension between the US-China could cap the potential upside in crude oil prices.

Western Texas Intermediate (WTI), the US crude oil benchmark, flirts with $76 per barrel for the first time since May and currently settles near $75.80 during the Asian trading hours on Thursday. WTI crude oil is supported by the broad US Dollar weakness, induced by the softer US Consumer Price Index (CPI) on Wednesday. 

On Wednesday, the US Bureau of Labor Statistics (BLS) revealed that the Consumer Price Index (CPI) dropped to 3% Year-over-Year in June from 4% in May. This figure was below the market expectation of 3.1%. In response to softer inflation reports, the US Dollar dropped to the 100.50 mark, the lowest daily close in a year. 

Investors are concerned about higher interest rates from central banks that may lead to a slowdown in economic growth and a decrease in oil demand. However, the US inflation data raised hope that the upcoming Federal Reserve (Fed) meeting on July 25-25 could likely be the last Fed rate hike and that the Fed could hit the pause button again for the rest of this year. The dovish Fed outlook weighed heavily on the US Dollar. 

Following the downbeat China’s Consumer Price Index (CPI) and the Producer Price Index (PPI) for June. Markets are concerned about the economic slowdown in China, the world’s second-largest economy.

On the US-China headline, China’s embassy Xie Feng said in a statement early Thursday that the US would meet China halfway to progressively restore relations between the two nations and their armies. Oil traders will closely watch this headline for a fresh impetus in WTI price. The renewed tensions between the US-China could cap the potential upside in crude oil prices. 

The recent upsurge in WTI comes after Saudi Arabia extended its voluntary 1 million barrels per day oil supply cut for the second month until August. The reduction will bring the country's output to 9 million barrels daily, the lowest level in several years.

Later in a week, the Producer Price Index (PPI) and the University of Michigan Preliminary Consumer Sentiment (July) data from the US will be released and could significantly impact the USD-denominated WTI price. Oil traders will closely watch these data and find opportunities around WTI crude oil