- The WTI peaked at $76.11 and then settled below $76.00.
- Jobless Claims came in lower than expected and strengthened the USD.
- Markets turned cautious amid escalating American and Chinese tensions.
On Thursday, the West Texas Intermediate (WTI) barrel failed to maintain its upwards momentum, which took the price to a high of $76.11. A cautious market environment and a strong Dollar are the main ones responsible for limiting the WTI’s upwards potential, while the reports of Oil American stocks may limit the downside.
The American Petroleum Institute (API) stated that Crude Oil stocks fell in the week ending July 14. In addition, the US Energy Information Administration (EIA) reported that Crude Oil Stocks fell by 708,000 barrels which lifted the black gold’s price.
However, the USD recovered amid lower-than-expected Jobless Claims in the week ending on July 14, meaning fewer people filed for unemployment benefits. The figure came in at 228K, lower than the 242K expected and the previous figure of 237K.
As a reaction, US Treasury yields advanced across the board, meaning that markets are betting on a more aggressive Federal Reserve (Fed). The 2-year yield displays nearly 2% gains and stands at 4.88%, while the 5 and 10-year yields rose to 4.10% and 3.84% showing more than 2% increase. As for now, according to the CME FedWatch tool, markets largely discounted a 25 basis point (bps) hike for next week's meeting, but the odds of a hike past July still remain low. Its worth noticing that higher rates are negatively correlated with Oil prices as they cool down economic activity and lower energy demand.
WTI Levels to watch
According to the daily chart, the technical outlook is neutral to bearish for the short term. Bulls are struggling to gain momentum, and the price is capped by the 200-day Simple Moving Average (SMA) so further downside may be on the horizon. In addition, indicators are losing strength, with the Relative Strength Index (RSI) displaying a negative slope near its midline in positive territory while the Moving Average Convergence Divergence (MACD) prints lower green bars.
Support levels: $73.50 (100-day SMA), $72.53 (20-day SMA), $72.00.
Resistance levels: $76.00, $76.90 (200-day SMA), $78.00.
WTI Daily chart
-638254707506298374.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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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.