WTI oil outlook: WTI price holds near 7-month low on renewed concerns about global growth

Slobodan Drvenica Windsor Brokers

WTI oil

WTI oil price remains under pressure and holding near new seven-month low on Wednesday, following short-lived recovery attempt on Tuesday, which stalled at $90 zone.

The price action holds in red for the fourth straight day, driven by fresh negative sentiment of renewed concerns about global economic growth, as prospects of a global recession warn that demand for oil would weaken.

The most recent data from China showed that industrial production and retail sales unexpectedly slowed, adding to concerns about the recovery of the world’s second largest economy and the biggest oil importer from the slowdown in the second quarter and a narrow escape from contraction is running out of steam.

The negative sentiment was additionally fueled by unexpected and strong fall of the US Empire State Manufacturing Index which fell to the lowest since May 2020.

Positive signal from the US API report on Tuesday which showed a drop in crude inventories was offset by overall negative sentiment and made no significant impact on oil prices.

Technical studies on daily chart show moving averages in full bearish setup and rising negative momentum, while repeated close below broken Fibo support at $88.42 (61.8% of $62.42/$130.48 upleg) boost negative signal.

Also, completion of failure swing pattern on weekly chart add to bearish tone, with weekly close below $88.42 pivot to confirm.

Although bears are in control, oversold stochastic and headwinds from former high at $85.39 (Oct 25 2021) may slow the action for extended consolidation before bears resume towards targets at $80 (psychological) and $78.48 (Fibo 76.4% of $62.42/$130.48).

Broken Fibo support at $88.42 reverted to solid resistance which should ideally cap, with extended upticks to stay under $90.00/$90.36 (psychological / daily Tenkan-sen) to keep bears intact.

Res: 87.67; 88.42; 90.00; 90.36.
Sup: 85.71; 85.39; 81.89; 80.00.

Interested in WTI technicals? Check out the key levels

1. R3 94.12
2. R2 92.11
3. R1 89.43
PP 87.41
1. S1 84.73
2. S2 82.71
3. S3 80.03

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD attacks 1.3300, refreshing three-month lows

GBP/USD is deep in the red near 1.3300, accelerating its downside to renew three-month lows in European trading on Tuesday. The ongoing escalation in the Iran war, combined with rising Oil prices, weighs negatively on the higher-yielding Pound Sterling as the US Dollar capitalizes on increased haven demand.

Gold bounces off lows, back above $5,100

Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.