- WTI reached its highest level since November 2022, above $84.00.
- Global supply tightening and Chinese inflation data are boosting oil prices.
- EIA data on oil values beat expectations.
On Wednesday, West Texas Intermediate (WTI) hit a high of $84.15, its highest level since mid-November 2022, and then stabilized around $83.00. The lower world supply given the prospect of further cuts in Saudi production and signs of deflation in China, which aroused expectations of more aggressive Chinese fiscal policies, explain these upward movements.
China reported that the Consumer Price Index (CPI) for July stood at -0.3% yoy vs. -0.4% expected, while the Producer Price Index (PPI) marked a 4.4% annual decline. in the same month, higher than the forecast 4.1%. According to TD Securities analysts, evidence of deflation in the Asian giant fueled hopes of “bazooka-style” fiscal stimulus packages to prop up the local economy. In this sense, a greater stimulus would increase the demand for Oil, and since China is the largest importer in the world, prices rise.
In addition, the voluntary production cuts in Saudi Arabia and the reduction in Russian exports contribute to a tighter world supply, which favors the price of black gold.
As for the data, the EIA (Energy Information Administration) crude oil reserves report, which gives a weekly measure of the variation in the number of barrels in crude oil inventories and its derivatives, stood at 5.85 million in the first week of August, above the expected 0.567 million.
WTI levels to watch
The technical outlook for WTI is bullish in the short term, but indicators are showing overbought conditions, suggesting that a technical correction could be on the horizon. The Relative Strength Index (RSI) indicates overbought conditions as it heads north above the 70 threshold, while the Moving Average Convergence Histogram (MACD) shows rising green bars. Furthermore, the pair is above the 20,100,200 day SMAs, highlighting the continued dominance of larger-scale bulls.
Support levels: $82.00, $80.00, $79.29 (20-day SMA).
Resistance levels: $84.00, $85.00, $87.00.
WTI Daily Chart
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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.
