- WTI found support at $85.32 and then stabilized around $85.50.
- Investors are still awaiting the release of the US NFP for August.
- OPEC is expected to extend its voluntary production cuts.
West Texas Intermediate (WTI) barrels overcame daily losses and traded neutral in the $85.50-$86.00 area, close to multi-month highs, benefiting from a weaker dollar. The dollar is trading weak against most of its rivals as investors digest Friday’s non-farm payrolls (NFP) numbers. No relevant economic data will be released during the session, with attention shifting to the ISM Services PMI figures for August on Wednesday.
The NFPs revealed that overall employment grew, but so did the unemployment rate, and wage inflation as measured by average hourly earnings slowed. Signs of cooling in the labor market could ease pressure on the Federal Reserve (Fed) to continue raising rates, and markets began to price in a less aggressive stance for the remainder of the year. For the time being, CME’s FedWatch tool indicates that the odds for a September pause remain high, while the odds for a November-December hike decreased to almost 35%, and those moderate bets explain the dollar’s weakness. Interest rates and oil prices tend to be negatively correlated, so as the Fed nears the end of its tightening cycle, WTI could gain more traction.
In addition, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are expected to extend their voluntary production cuts until October, which could contribute to a tightening of global supply. Oil prices could get an additional boost.
WTI levels
Based on the daily chart assessment, a bullish outlook is seen for WTI in the near future. The Relative Strength Index (RSI) is above its midline in the positive territory near the overbought threshold. Furthermore, the green bars of the moving average convergence divergence (MACD) confirm the solid bullish momentum. Furthermore, the pair is above the 20,100,200-day SMA, which points to bullish strength in the broader context.
Support levels: $85.30, $84.00, $83.00.
Resistance levels: $87.00, $88.00, $89.00.
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.
