- Western Texas Intermediate (WTI) rises more than 4%, thanks to the weak dollar.
- Changes in China’s zero tolerance stance, Covid-19, will support rising oil prices.
- WTI could recover after OPEC’s cut in crude oil production and the EU’s ban on Russian oil.
The benchmark US Crude Oil index, also known as Western Texas Intermediate (WTI), rose sharply on the release of US employment data, which beat estimates, while the unemployment rate shows signs of falling. relaxation in the labor market, as expected by the Federal Reserve. At the time of writing, WTI was trading at $91.70 a barrel, after hitting a three-week high of $92.55.
Dollar on the defensive, despite positive US jobs report
The US dollar remains weak overall, weighed down by October’s non-farm payrolls report, a tailwind for dollar-denominated assets. The US economy added 261,000 jobs, above the 200,000 forecast by analysts, but the rise in the unemployment rate to 3.7% from 3.5% the previous month, increased traders’ speculation that the Fed would tighten its monetary policy but at a slower pace.
On the other hand, news that Chinese authorities intend to relax Covid-19 restrictions would benefit oil prices, as one of the leading epidemiologists told a local investment conference that he expects “substantial changes” in oil policy. zero tolerance of Covid-19.
On the other hand, the Dollar Index, which tracks the evolution of the greenback against most of the G8 currencies, falls more than 1.50%, to 111,102, after reaching a new maximum of two weeks, to 113,148, after the Reserve Federal.
Another factor that would keep WTI prices north is the Organization of the Petroleum Exporting Countries and its allies, known as OPEC, which cut crude oil production by nearly 2 million bpd. Notably, US stockpiles were down, as the US Energy Information Administration (EIA) reported earlier in the week.
The aforementioned factors pushed up WTI prices as the United States released oil from the Strategic Petroleum Reserve (SPR). However, the eurozone’s ban on Russian oil, due to start on December 5, would put further pressure on oil supply, meaning it could be possible for WTI to hit $100 a barrel by the end of the year.
WTI Key Technical Levels
Source: Fx Street
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