WTI tops $77 on improving risk appetite

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  • WTI rises more than 3% on increased optimism about China’s reopening.
  • The increase in US reserves was not an excuse for WTI to continue advancing.
  • WTI Price Analysis: If it recovers to $78.00, it exposes a rally to $80.00.

The Western Texas Intermediate (WTI)the benchmark for US crude oil, is up more than 3% on Wednesday, breaking above the 20-day EMA at $76.55, after erasing Tuesday’s losses. Risk appetite, weaker dollar and rising US oil inventories favor black gold. At the time of writing these lines, WTI is trading at $77.30.

Trader sentiment remains bullish, as evidenced by the rise in global stock markets. Estimates that the December CPI will show annual inflation cooling to 6.5%, from 7.1% in November, kept money flows in favor of risky assets.

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Weak inflation numbers in the US would be negative for the dollar, which could boost oil demandas dollar-denominated commodities would be cheaper for buyers with holdings of other currencies.

The US Federal Reserve is expected to raise rates by 25 basis points at the February meeting and again in March after a 50 basis point rise in December.

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According to sources quoted by Reuters, “China could bounce back strongly, especially if supported by monetary and fiscal stimulus. Central banks may find they have room to cut rates if inflation falls substantially and economies are in recession.”

Oil prices rose as hopes for an improving global economic outlook and concerns about the impact of sanctions on Russian crude production outweighed a larger-than-expected build in US crude and fuel reserves.

The US Energy Information Administration (EIA) reported that crude oil inventories rose by 19.0 million barrels last week, the third-highest weekly rise on record and the largest since inventories rose by a record 21.6 million barrels in February 2021.

WTI Price Analysis: Technical Perspective

From a technical perspective, WTI remains neutral to the downsidewhich, if it continues to rise, would collide with the confluence of the 50 day EMA and a three-month-old downside resistance trend line around $79.09. Oscillators such as the Relative Strength Index (RSI) suggest that buyers are gathering momentum, but the Rate of Change (RoC) suggests that the advance could be gradual as volatility levels remain subdued.

If the WTI recovers $78.00the door could be opened to the aforementioned confluence of technical indicators that, once overcome, would sharpen the recovery of WTI up to $80.00 per barrel. Secondly, flop at $78.00 could keep prices lower, and open the door for sellers, to target the 20 day EMA at $76.56.

WTI technical levels

Last price today 77.7
daily change today 2.48
today’s daily variation 3.30
today’s daily opening 75.22
daily SMA20 77.13
daily SMA50 79.47
daily SMA100 82.75
daily SMA200 92.76
previous daily high 76.12
previous daily low 74.09
Previous Weekly High 81.56
previous weekly low 72.64
Previous Monthly High 83.3
Previous monthly minimum 70.27
Fibonacci daily 38.2 75.34
Fibonacci 61.8% daily 74.86
Daily Pivot Point S1 74.17
Daily Pivot Point S2 73.11
Daily Pivot Point S3 72.13
Daily Pivot Point R1 76.2
Daily Pivot Point R2 77.18
Daily Pivot Point R3 78.24

Source: Fx Street

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