WTI bounces back on recession concerns, Russian unrest as buyers eye $70 benchmark
|- Political turmoil in Russia and concerns of global recession partially fuel WTI’s rebound.
- Weak business climate in Germany and China’s decelerating growth threaten oil demand.
- Saudi Arabia’s crude output adjustments might spur WTI’s recovery toward $70 per barrel.
Western Texas Intermediate (WTI), the US crude oil benchmark, snaps two days of losses and climbs more than 0.50% amidst global economic concerns of an impending recession and political turmoil in Russia. Therefore, WTI is trading at $69.49 per barrel late in the North American session after hitting a daily low of $68.71.
US crude oil climbs 0.50% late in the Noth American session as it shrugs off global economic jitters
During the weekend, a conflict erupted between Moscow and the Russian mercenary private group Wagner which withdrew from the south of Russia, marched towards Moscow but halted their advance, but stalled due to an agreement between its leader and Russian President Vladimir Putin.
Regarding the worldwide economic outlook, last Friday’s release of Eurozone (EU) and North American business activity indicators, known as PMIs, pointed to slower economic growth. Therefore, WTI slid 0.60% on Friday, closing below the $70.00 per barrel figure, on concerns that demand would shrink.
Even though WTI recovered some ground, the rally stalled on the back foot of a weaker business climate in Germany, as the Ifo survey showed signs the country’s Gross Domestic Product (GDP) would shrink in Q2.
Moreover, recent rate cuts by the People’s Bank of China (PBoC) showed China’s struggling to keep its pace of growth, which has been downward revised by some Wall Street banks. That, alongside decelerating business activity in China, threatens to hurt oil demand.
Oil got a lifeline as future US supply numbers fell for the eighth week in a row, for the first time since July 2020, with oil rigs falling 6 to 546 the latest week, its lowest since April 2022, while gas rigs held steady at 130.
Given the fundamental backdrop, WTI fell 3.6% during the last week, but Saudi Arabia’s crude output adjustments could trigger WTI’s recovery at least towards the $70.00 mark.
WTI Price Analysis: Technical outlook
From a daily chart perspective, WTI remains trading sideways, consolidating at around $68-$70.50 per barrel, capped on the upside by several daily Exponential Moving Averages (EMAs). The 20-day EMA sits at $70.65, followed by the 50-day EMA at $72.10. If WTI buyers conquer those two-level, that will open the door to challenge the 100-day EMA at $74.24. Conversely, if WTI drops below June’s 23 daily low of $67.40, that would pave the way to test the year-to-date (YTD) low of $63.61.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.