- The WTI struggles to preserve modest intradic advances in mixed fundamental signals.
- The hopes of a commercial agreement between the US and China and a weaker USD provide support to the raw material.
- Concerns for excess supply limit the profits of black liquid and justify caution for bullies.
The prices of crude oil West Texas Intermediate (WTI) struggle to capitalize on their modest intradic movement up and fall to a new daily minimum, about 58.00 $ during the first half of the European session on Friday. The raw material, for now, seems to have stagnated its recovery from the proximity of the level of $ 56.00, or a minimum of three weeks reached Thursday.
The hopes of a possible de -escalation of a bitter commercial war between the US and China – the two largest economies in the world – help relieve concerns about the demand for fuel. Apart from this, the threat of US President Donald Trump to impose secondary sanctions against any country that buys Iranian oil turns out to be a key factor that supports black liquid. In addition, a modest recoil of the USD from a maximum of several weeks provides more support for crude oil prices, although the expectations of a greater supply of Opec+ that reach the market limit the bullish potential.
From a technical perspective, the raw material faced last week a rejection near a horizontal support break, which has now become an obstacle near the level of 65.00. The subsequent fall and the negative oscillators in the daily chart favor bass traders, suggesting that the path of lower resistance for crude oil prices is down. That said, repeated failures to find acceptance below the level of $ 58.00 justify a certain caution before opening new bearish positions around the raw material and position themselves for any additional depreciation.
However, a convincing break and a daily closure below the aforementioned level could drag the prices of crude oil again below the round figure of 57.00 $, towards a new test of the minimum of the previous night near the area of 56.60 $. Additional monitoring will reaffirm the negative bias in the short term and will present a minimum of several years – levels below the 55.00 $ Psychological brand reached in April.
On the other hand, an impulse beyond the maximum of daily oscillation, around the $ 59.55 region, could trigger a short coverage rally and allow crude oil prices to recover the psychological brand of 60.00. The impulse could extend even more, although it runs the risk of quickly fading near the region of 60.80 $ -60.85 $. This is closely followed by the round figure of $ 61.00, which if it is exceeded should pave the path for a movement towards the level of $ 62.00 en route to the area of 62.50 $ and the round figure of 63.00 $.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
