- WTI price is resuming the uptrend after sharply correcting on Tuesday.
- A weaker US dollar and lower inventories offer support to US oil.
- Acceptance above the 21-day SMA at $103.24 is critical to resume the uptrend.
WTI (NYMEX futures) is looking to extend the bounce above the $103 level during the European session on Wednesday, after finding strong buying below the $102 region the day before.
The renewed rise in US oil prices comes after black gold fell about 5% on concerns about global growth, which raised fears about the demand for oil and its derivatives. The International Monetary Fund (IMF) cut the global growth forecast for 2022 by almost 1 percentage point on Tuesday.
Investors appear to have looked beyond the IMF forecasts, as a 4.5 million barrel decline in weekly US API crude stocks, the Libya supply outage and falling production from OPEC+ and offer much-needed support to the price of WTI.
In addition, the price of oil is also supported by the gradual reopening of the city of Shanghai from the covid lockdown. Meanwhile, a general pullback in the US dollar also remains one of the key reasons behind the rally in dollar-denominated oil prices.
From a short-term technical perspective, WTI’s corrective retracement closed below the 21-day SMA at $103.24 for the first time this week.
However, with the 14-day RSI still holding above its midline, buyers remain hopeful for a significant recovery.
Therefore, a daily close above the previous level is needed to trigger a sustained move towards the previous day’s high of $108.23. Prior to that, the $105 round level will emerge as a tough nut to crack for the bulls.
WTI daily chart
On the other hand, if the bulls fail to find support above the 21-day SMA, then a test of the 50-day SMA at $100.85 is inevitable.
The next significant downside target is seen at the psychological level of $100.00.
WTI additional levels
Source: Fx Street
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