- WTI increased more than 1% on Friday and found resistance near $81.30, above the 20-day SMA.
- US Oil and natural rigs decreased for the sixth week in a row.
- The USD trading neutral allowed the black gold to gain traction.
- Chinese financial woes may limit the WTI’s upwards momentum.
At the end of the week, the West Texas Intermediate (WTI) barrel rose above the 20-day Simple Moving Average (SMA) of $81.30, seeing more than 1% gains.
The US reported on Friday that the weekly Baker Hughes Rig Counts decreased to 520 from the previous 525 in the week ending on August 18. In that sense, these figures are pointing at a slump in US Oil production which could exacerbate the global supply tightness, driving the price to the upside.
That being said, the fragile economic situation in China may limit the upside potential for WTI. On Thursday, the Chinese real-state giant Evergrande filed for bankruptcy protection in a US court, which spurred a negative market sentiment on fears of a global contagion. It is worth noticing that China is the largest Oil importer in the world, so a weak Chinese economy would lower the energy demand and hence limit the WTI’s upwards movements.
In addition, the USD, measured by the DXY index, jumped to a daily high of 103.60, its highest since mid-June, due to hawkish bets placed by markets on the Federal Reserve (Fed). On Wednesday, the July meeting's Federal Open Market Committee (FOMC) minutes showed that members were concerned with the upside inflation risks and left the door open for another hike in this cycle. Higher interest rates and a stronger USD could also challenge oil prices in the upcoming sessions.
WTI Levels to watch
According to the daily chart, the technical outlook for the WTI remains neutral to bullish as the bulls are recovering ground. With an upward trend above its midline, the Relative Strength Index (RSI) points towards a bullish sentiment, while the Moving Average Convergence (MACD) displays weaker red bars. Additionally, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, implying that the bulls remain in control on a broader scale.
Support levels: $82.00, $83.65, $84.80
Resistance levels: $81.20 (20-day SMA), $80.00, $79.00
WTI Daily chart
-638279887601359989.png)
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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.