WTI Price Analysis: Soars after Powell’s remarks

• WTI hit its highest level since June 8, sitting at $72.70.
• Powell gave no hard-line surprises and stuck to his stance from last Wednesday.
• The good tone of the markets and the rise in values ​​led to the rise of black gold.

West Texas Intermediate (WTI) rose to its highest level in two weeks and then stabilized at $72.40 following Jerome Powell’s testimony before the US Congress. Despite hinting at further hikes, he noted that the economy and labor market remain strong, fueling a positive market environment and a recovery in US equities. In addition, the dollar, measured by the DXY index, fell to 102.05, with losses of more than 0.40%.

Stocks rally on Powell’s testimony

Speaking to the US Congress, Jerome Powell, Chairman of the US Federal Reserve (Fed), stated that “almost all participants in the FOMC expect that it is appropriate to raise interest rates a little further at the end of anus”. However, he brought optimism to the markets by stating that he sees a moderation in wages, and by confirming that the decision will remain data driven. Expectations that the Fed is nearing the end of its tightening cycle strengthen WTI as oil prices tend to be negatively correlated with interest rates.

Additionally, US stocks pared some of the daily losses on the comments, but continued to correct overbought conditions seen in last week’s impressive rallies.

For the rest of the week, the focus will be on Thursday’s US jobless claims data and Friday’s S&P manufacturing PMI data as investors continue to shape their expectations for the next Fed meeting in July. At the moment, according to CME’s FedWatch tool, investors are pricing in an interest rate hike of 25 basis points (bp).

WTI levels to watch

The daily chart suggests that WTI remains neutral to bullish in the short term. Despite the indicators regaining traction and jumping into positive territory, the price remains below the 100 and 200 day simple moving average (SMA).

That being said, the next resistances are located at $73.00, followed by the 100-day SMA at $74.45 and the psychological signal of $75.00. On the other hand, supports are observed in the area of ​​$72.00, followed by the SMA of 20 days at $70.77 and the $70.00 area.

WTI daily chart