- WTI dropped 0.95% as China’s rate cut and push for increased lending reflect a slowing economy.
- Saudi Arabia’s July oil shipments to China see a significant 31% decline, adding to the bearish sentiment.
- US rig count decreases, hinting at potential supply tightening, which could provide a floor for WTI prices in the near term.
Western Texas Intermediate (WTI), the US crude oil benchmark, posted losses of 0.95% on Monday as China’s economic woes weighed on oil prices. Uncertainty from the US Federal Reserve (Fed) direction on rates favors the greenback, a headwind for US Dollar (USD) denominated assets. WTI is trading at $80.58, down 0.95%.
Despite output cuts from Saudi Arabia and Russia, China’s economic concerns and a resilient US Dollar weigh on crude oil prices
WTI extended its losses despite the People’s Bank of China (PboC) cutting rates by ten basis points in efforts to propel an economy that is continuing to slow down. At the same time, government officials and PboC members urged banks to increase loans.
In the meantime, Saudia Arabia and Russian crude oil output cuts cushioned the WTI drop. However, Saudi Arabia’s July oil shipments to China plunged 31% from June, as revealed by China customs data.
Data supplied y Baker Hughes showed the number of active rigs fell by 4 to 520 in the last week. Supply tightening could keep WTI prices from falling sharply, as noted by ING analysts. They said, “The US has lost 107 oil rigs since early December, and it is not too surprising that this reduced drilling activity means that oil production growth forecasts for later this year and through 2024 are looking relatively modest.”
WTI Price Analysis: Technical outlook
From a technical perspective, a golden cross is about to form, which would suggest that oil prices would continue to rally, with the year-to-date (YTD) high seen as the first resistance to challenge at $84.85, followed by the November 11 daily high at $90.08, ahead of the November 7 high at $93.73. Conversely, WTI’s first support would be $80.00 a barrel, followed by the latest swing low of $79.00.
WTI Price Action – Daily chart
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD resumes slide below 1.0500
EUR/USD gained modest upward traction ahead of Wall Street's opening but resumed its slide afterwards. The pair is under pressure in the American session and poised to close the week with losses near its weekly low at 1.0452.
GBP/USD nears 1.2600 as the US Dollar regains its poise
Disappointing macroeconomic data releases from the UK put pressure on the British Pound, yet financial markets are all about the US Dollar ahead of the weekly close. Demand for the Greenback increased in the American session, pushing GBP/USD towards 1.2600.
Gold pierces $2,660, upside remains capped
Gold (XAU/USD) puts pressure on daily lows and trades below $2,660 on Friday’s early American session. The US Dollar (USD) reclaims its leadership ahead of the weekly close, helped by rising US Treasury yields.
Broadcom is the newest trillion-dollar company Premium
Broadcom (AVGO) stock surged more than 21% on Friday morning after management estimated on Thursday’s earnings call that the market for customized AI accelerators might reach $90 billion in fiscal year 2027.
Can markets keep conquering record highs?
Equity markets are charging to new record highs, with the S&P 500 up 28% year-to-date and the NASDAQ Composite crossing the key 20,000 mark, up 34% this year. The rally is underpinned by a potent mix of drivers.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.