- WTI found support at a daily low of $78.66 and then recovered above $79.00 still holding daily losses.
- FOMC decision will be the session’s highlight – expected to deliver a 25 bps hike.
- EIA Crude Oil stocks fell in the third week of July by 0.6M, lower than expected.
The West Texas Intermediate (WTI) barrel trades soft on Wednesday as markets await the Federal Reserve (Fed) decision. In addition, the Energy Information Administration (EIA) reported a lower-than-expected decline in inventories in the week ending on July 21 and seem to be weighing on Oil prices.
On the other hand, the USD as per the DXY Index is declining, and US Treasury yields are decreasing ahead of the Federal Reserve's (Fed) announcement later in the session. Markets have already priced in a 25 basis point (bps) increase but are placing bets on a low likelihood of a similar increase in September (20%) and November (45%), respectively. Investors will need to model their expectations for the upcoming meetings based on the messaging regarding forward guidance since there won't be an updated macro forecast or dot plot. Its worth noticing that higher rates tend to cool down economic activity so the bets as to what the Federal Reserve will do following the decision may affect the WTI price dynamics.
On a positive note, the announcement on Tuesday that the Chinese government is to step up economic stimulus to bolster economic activity could provide support to the WTI as China is the largest Oil importer in the world, so a stronger economic activity would imply a greater Oil demand.
WTI Levels to watch
The daily chart of the WTI suggest a neutral to bullish outlook for the short term as buyers seem to be losing steam. The Relative Strength Index (RSI) has a neutral slope near the overbought threshold, while the Moving Average Convergence Divergence (MACD) printed a lower green, implying that the bulls are losing steam.
Resistance levels: $80.00,$81.00,$82.60.
Support levels: $76.70 (200-day SMA), $74.59 (20-day SMA),$73.50 (100-day SMA).
WTI Daily chart
-638259879133061271.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 retreats from tops and retests 1.0730 on US data
EUR/USD now faces some downside pressure on the back of some recovery in the US Dollar after the JOLTs Job Openings report came in stronger than expected in May.
GBP/USD keeps the bullish bias near 1.2680
The Dollar's vacillating price action allows GBP/USD to extend its daily bounce and approach the key 1.2700 neighbourhood, as investors assess the ECB forum and US data releases.
Gold gives away gains and returns to the vicinity of $2,320
The precious metal now fades the initial uptick and trades with modest losses near the $2,320 zone per ounce troy in response to the data-driven bounce in the Greenback.
Crypto Today: Bitcoin gets less interest from traders, Ethereum ETF could attract $5 billion inflows
Bitcoin market sees a decline in volatility per on-chain data from Crypto Quant. Bitcoin ETFs saw a net inflow of $129 million on July 1; on-chain analysts predict a relief rally in BTC.
Eurozone inflation ticks down in June
The eurozone’s inflation rate has come down from 2.6% to 2.5%, while core inflation remained at 2.9%. Nothing in these figures would make the ECB cut again in July.