WTI Price Analysis: WTI drops amid Chinese real-state sector fears
|- WTI fell below $83.00 and reached a daily low of $81.30 during the American session.
- County Garden Holdings, a Chinese real-state giant, announced that it would suspend part of its bond trading.
- A stronger USD also weighs on Oil prices.
At the start of the week, the West Texas Intermediate (WTI) barrel lost traction, fell to a daily low of $81.30, and settled near $82.00. A stronger USD on the back of higher US yields and Chinese real-state sector concerns are mainly responsible for the Oil’s downward trajectory.
China's major real estate firm, Country Garden Holdings, revealed a projected loss of $7.6 billion for H1 2023 and announced that it would halt trading 11 onshore bonds starting Monday. This caused a nearly 20% drop in their shares, bringing down the Shangai Composite Index. In addition, Moody’s warned of a potential crisis spillover to the country's property and financial markets, possibly delaying the sector's recovery. It's worth mentioning that China is the largest Oil importer in the world, so the weakness of the real-estate industry, an important gauge of an economy’s health, weighs on the WTI’s price.
On the other hand, the USD, measured by the DXY index, rose above 103.00, and the Greenback gained interest in higher US yields. In that sense, the bond markets are flashing signals that investors are confident that the Federal Reserve (Fed) won’t hike in September but that the odds of a 25 basis point increase in November have risen to nearly 40%, according to the CME FedWatch tool. In that sense, higher rates which tend to cool down economic activity, present another challenge to Oil prices.
WTI Levels to watch
The technical analysis of the daily chart suggests a shift towards a neutral to a bearish outlook for WTI, with indications of bullish exhaustion. The Relative Strength Index (RSI) exhibits a negative slope above its midline, while the Moving Average Convergence Divergence (MACD) displays fading green bars. That being said, the pair is above the 20,100,200-day Simple Moving Averages (SMAs), indicating a favourable position for the bulls in the bigger picture.
Support levels: $81.30, $81.00, $79.50.
Resistance levels: $83.70, $84.00, $85.00
WTI Daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.