WTI Price Analysis: Will close a 2% winning week, bullish momentum moderates

• WTI rose more than 0.70% on Friday, near $88.00, but indicators on the daily chart began to show preliminary signs of exhaustion.
• The reduction in supply favors oil prices.
• Weakening global demand could cap profits.

On Friday, West Texas Intermediate (WTI) advanced near $88.00 and settled below $87.00, still on pace for a 2% weekly gain. That said, the daily chart continues to show overbought conditions, suggesting that a technical correction to the downside could be on the horizon.

On the positive side, Saudi Arabia and Russia will extend voluntary supply cuts for the rest of the year and boosted oil prices during the week. In addition, demand from the world’s largest consumer, the US, continues to resist, as the latest data shows, which could also favor prices.

On the other hand, China and the Eurozone report less than encouraging economic data and lower demand will limit the increases in WTI. On the other hand, a stronger Dollar, whose DXY hit multi-month highs this week thanks to the Federal Reserve’s (Fed) hawkish bets, will also present challenges to the black gold’s upside in the coming sessions. Finally, increased oil production from Iran and Venezuela could add selling pressure.

WTI levels to watch

On the daily chart, WTI is showing signs of bullish exhaustion, leading to a neutral to bullish technical picture. The Relative Strength Index (RSI) is firmly in overbought territory with a positive slope above its midline, suggesting a possible pullback to consolidate gains, while the Moving Average Convergence (MACD) shows green bars stagnant. Furthermore, the pair is above the 20,100,200-day SMA, suggesting that buyers are firmly in control of the broader time frame.

Support levels: $87.00, $85.00, $83.50.

Resistance levels: $88.00, $89.80, $91.00.

WTI Daily Chart