WTI attempts a break above $90.00 as hopes for demand revival accelerate
|- Oil prices are aiming for a break above $90.00 to trigger a bullish reversal.
- An upbeat US NFP has infused fresh blood into the oil bulls.
- The demand for oil is recovering in China as Covid-19 concerns fade.
West Texas Intermediate (WTI), futures on NYMEX, is attempting to overstep the psychological resistance of $90.00 as investors are expecting a recovery in the demand for oil after the upbeat US Nonfarm Payrolls (NFP). The oil prices are displaying topsy-turvy moves in a tad wider range of $86.37-90.06 from the past week. Now, the black gold is looking to deliver an upside break of the consolidation.
Fresh blood has been infused in the oil prices after the US Bureau of Labor Statistics reported more than double job additions in the labor market against expectations. The street was expecting an increment in the labor market by 250k. However, an uptick by 528k also raised the demand outlook for oil. Higher employment opportunities indicate that the extent of investment by the US corporate players is extremely high, which will eventually improve the oil demand ahead.
Meanwhile, the Chinese economy is recovering from the headwinds of the resurgence of Covid-19. Earlier, the announcement of the zero Covid-19 policy by the Chinese administration had restricted the movement of men, materials, and machines, which resulted in a slump in the oil demand. Now, the normalcy in China has triggered the oil demand forecasts to restoration.
Also, the dragon economy has surprised markets with faster-than-expected growth in oil purchases for July. The world's top crude importer took in 8.79 million barrels per day in July, up from a four-year low in June, but still 9.5% less than a year earlier, as reported by Reuters.
On the supply front, a promise of pumping more oil into the global supply by the OPEC+ is losing its impact. Last week, the oil cartel promised the addition of 100,000 barrels per day (bpd) from September. Considering the oil-producing countries, many players are already failing to cater to the promised output. However, Saudi Arabia and United Arab Emirates (UAE) are carrying the potential to add up production capacity.
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