- WTI is trading near $80.00 after hitting a daily high near $80.80.
- China’s fragile economic situation limits upside potential. Economic support may favor oil prices.
- With an aggressive line, Jerome Powell could also limit the rises.
He West Texas Intermediate (WTI) it went back above $80 earlier in the week. Even so, its rise is limited due to the Chinese economic situation and investors’ bets on a more aggressive Federal Reserve (Fed). On the upside, the markets are watching the possible supports that the Chinese government can take.
Investors value the Chinese situation and Powell’s words on Friday
Oil prices manage to maintain momentum despite Chinese economic woes. The real estate sector remains fragile, while Evergrande’s values plunged more than 80%. In this sense, what is driving oil prices is the possible action of China to support and shore up the local economy.
On the other hand, black gold could see further declines as Chairman Powell stated that he expects the US economy to cool down and the bank will hold rates until inflation shows concrete evidence that it is slowing.
Consistent with this, World Interest Rates Probabilities shows that markets are currently pricing in a 90% chance of no hike at the next meeting on September 20, 2023. Further down the line, the probability of a 25 basis point hike is stands at 70% in November. This anticipated rate hike trajectory would translate into a 5.75% target rate. It should be noted that raising rates cools economies, reduces demand for Energy, and therefore puts downward pressure on oil prices.
technical levels
Daily chart analysis suggests a neutral to bullish outlook for WTI, with bulls gaining strength, though challenges remain. The Relative Strength Index (RSI) indicates positive momentum with an upward slope just above its midline, while the Moving Average Convergence (MACD) features lower red bars. Furthermore, the pair is below the 20-day SMA but above the 100-day and 200-day SMAs, highlighting the continued dominance of bulls in the broader outlook.
Support levels: $79.80, $78.20, $77.70.
Resistance levels: $81.15 (20-day SMA), $82.00, $82.50.
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.
