- WTI price is rebounding as sanctions on Russia offset covid risks in China.
- A stronger US dollar from aggressive Fed tightening could cap the rally.
- The WTI price needs to break out of the range between the 21 and 50 day SMAs.
WTI (NYMEX futures) is rallying above $101.00, having found strong buying once again at the $99.00 level.
Black gold is back positive, despite risk aversion in the market, as new Western sanctions against Russia for its civil atrocities in Ukraine are overshadowing concerns over China’s covid lockdowns.
The city of Shanghai is under prolonged lockdowns amid the relentless rise in covid cases in recent weeks. This has fueled concerns about the demand for oil and its derivatives from the world’s second largest oil consumer, China.
Amid the escalating conflict in Ukraine, investors are flocking to the safe-haven US dollar, which may limit the renewed rally in US oil. Additionally, the dollar is benefiting from aggressive expectations from the Fed ahead of the release of Wednesday’s FOMC minutes.
From a short-term technical perspective, WTI bulls are hopeful as long as it remains above the 50-day moving average at $98.60.
If the recovery momentum holds then WTI price could look to retest the downsloping 21 SMA, now at $104.00.
The next challenge for the bulls will be to break above the previous day’s high of $104.60.
However, the RSI remains below the midline, currently at 48. This suggests that the bounce could probably be temporary.
If the bears break the critical support of the 50 SMA, then a strong sell towards the $95.00 level cannot be ruled out.
Further down, the mid-March lows of $92.36 will be the sellers’ next target.
WTI daily chart
WTI additional levels
Source: Fx Street
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