WTI drops over 3% amid risk-on sentiment prevailing, as geopolitical jitters fade
|- WTI trades at $82.49 per barrel, down 3.16%, as traders dismiss fears of Middle East conflict escalation.
- Prices fail to break 50-day moving average at $86.38 despite ongoing Israeli offensive in Gaza.
- Upcoming US Federal Reserve meeting, Apple's earnings, and China's PMI data to influence oil prices.
West Texas Intermediate (WTI) dropped more than 3% amid the North American session amid a risk-on impulse, with traders shrugging off fears the Middle East conflict would escalate further. That, alongside the looming US Federal Reserve monetary policy meeting, boosted the Greenback, as WTI exchanges hands at $82.49 per barrel, down 3.16%.
Oil prices decline amid easing Middle East conflict fears and anticipation of Fed meeting
Last Friday’s news that Israel began its ground offensive in Gaza stoked worries the conflict could expand in the region, which concentrates a third of Oil global output. Nevertheless, of late, it has failed, as seen by WTI prices failing to crack the 50-day moving average (DMA) at 86.38.
Even though Israel's offensive continues, it has not been as strong as initially expected by market participants. Sources cited by Reuters commented that the “war premium has come out of the market” as the conflict remains contained.
Aside from this, market participants' focus shifts to the Fed’s decision. The US central bank is expected to keep rates unchanged. Besides that, market players are eyeing Apple’s earnings to gather signs of a probable economic slowdown.
China’s data would also influence Oil prices, as it is one of the largest importers. The economic docket would feature Manufacturing and Services PMIs, with Oil speculators looking for clues of stabilization in its economy.
WTI Price Analysis: Technical outlook
The daily chart portrays the US Crude Oil as neutral to upward biased, likely to find support at the October 6 low of $81.56, ahead of sliding past the bottom Bollinger’s band. If WTI stays above $82.00, the next resistance that it would face would be the 20-da cy moving average (DMA) at $85.61, followed by the 50-DMA at $86.38. Conversely, if WTI dives below $81.00, that next support would be the August 24 low of $77.64.
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