Oil on the brink of turning green with the US session opening the Fed's Jackson Hole week


  • Oil price on the brink of flipping a negative performance into a positive one for this Monday's trading day.
  • Prices retreated earlier as traders focused on Chinese demand fears and efforts to get a ceasefire deal in Gaza.  
  • The US Dollar Index eases further after hedge funds go long on the Japanese Yen, which appreciates against the Greenback. 

Oil turns flat ahead of the US trading session, although risk elements that pushed prices lower this Monday are not fading that easily. Traders are fearing weaker demand again from Oil importer China, weighing on overall market sentiment. Meanwhile, all eyes are on the Middle East, where a successful outcome of Gaza ceasefire talks could reduce supply risks substantially, according to Reuters. With two major risk premium events being priced out, some more easing in Crude prices might be at hand. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is feeling the heat from the Japanese Yen. Markets got rattled on Friday after the Commodity Futures Trading Commission (CFTC) reported that hedge funds were back to being net long on the Japanese Yen (JPY) for the first time since 2021. This weighed on the Greenback and spilled over into the DXY’s performance, which flirts with a break below 102 ahead of the Federal Reserve’s Jackson Hole Symposium later this week. 

At the time of writing, Crude Oil (WTI) trades at $75.37 and Brent Crude at $78.93

Oil news and market movers: Finally there?

  • US Secretary of State Antony Blinken has joined up with the Prime Minister of Israel Benjamin Netanyahu on Monday. Bloomberg reports that Netanyahu said the meeting was positive and Israel is commited to follow the US proposal that is currently on the table. 
  • Bloomberg reports that Iran has jacked up the premium on its light crude prices by $2.35 per barrel over the benchmark Oman-Dubai pricing for September sales to Asia. The move is rather strange taking into account that markets are concerned about a slowdown from China.
  • The weekly Commodity Futures Trading Commission (CFTC) data revealed that hedge funds are still net long on Crude Oil even though price action has not been outperforming these past few weeks. Bloomberg reports that hedge funds might be compelled to cut their stake if crude does not gain ground this week, adding to more selling pressure.
  • Oil output in Libya has increased by 300,000 barrels per day with the Waha Oil production back to normal levels after maintenance, Reuters reports. 
  • Headline risk is to be considered with ceasefire talks on Gaza taking place in the coming days. 

Oil Technical Analysis: Hedge Funds in the driving seat

A big warning already appeared last week on charts after Oil prices were unable to cross over the important 100-day Simple Moving Average (SMA) around $78.45, a key technical level. With that rejection unfolding, the Relative Strength Index (RSI) in the daily chart is still trading fairly in the middle of its range, not looking oversold. This could mean more downside to come, particularly when hedge funds start to cut their stake, triggering a further slide towards $72.00 or lower. 

On the upside, it becomes very difficult to be bullish with a lot of resistance levels nearby. The first element to look out for is the pivotal $75.27. Next up is the double level at $77.65, which aligns with both a descending trendline and the 200-day Simple Moving Average (SMA). In case bulls are able to break above it, the 100-day SMA at $78.45 could trigger another rejection as it did last week.  

On the downside, the low from August 5 at $71.17 is the best level for a bounce. It might not be bad to start considering levels below $70.00 in case ceasefire talks reach a breakthrough and hedge funds start selling their speculative stake in Oil contracts. The $68.00 big figure level is the first level to watch followed by $67.11, which is the lowest point from the triple bottom seen back in June 2023. 

US WTI Crude Oil: Daily Chart

US WTI Crude Oil: Daily Chart

WTI Oil FAQs

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

 

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

XM
Account
7.2
Tools
9.2
Service
9.4
Trading
9.0
Trust
7.0
Experience
8.4
Read review
Moneta Markets
Account
7.4
Tools
6.6
Service
8.0
Trading
6.6
Trust
5.2
Experience
9.2
Read review
Trading Pro
Account
7.2
Tools
5.2
Service
6.6
Trading
8.0
Trust
5.0
Experience
7.0
Read review
Pepperstone
Account
8.2
Tools
8.2
Service
7.4
Trading
9.0
Trust
8.8
Experience
9.0
Read review
XM
Read review
Moneta Markets
Read review
Trading Pro
Read review
Pepperstone
Read review
Trading Pro
Read review
Pepperstone
Read review
XM
Read review
Moneta Markets
Read review
Trading Pro
Account
7.2
Tools
5.2
Service
6.6
Trading
8.0
Trust
5.0
Experience
7.0
Read review
Pepperstone
Account
8.2
Tools
8.2
Service
7.4
Trading
9.0
Trust
8.8
Experience
9.0
Read review
XM
Account
7.2
Tools
9.2
Service
9.4
Trading
9.0
Trust
7.0
Experience
8.4
Read review
Moneta Markets
Account
7.4
Tools
6.6
Service
8.0
Trading
6.6
Trust
5.2
Experience
9.2
Read review

Recommended content


Recommended content

Editors’ Picks

AUD/USD retakes 0.6000 on the road to recovery amid US-China trade war

AUD/USD retakes 0.6000 on the road to recovery amid US-China trade war

AUD/USD is off the five-year low but remains heavy near 0.6000 in the Asian session on Monday. The pair continues to suffer from a US-China trade war as US President Trump said that he would not do a deal with China until the US trade deficit was sorted out. 

AUD/USD News
USD/JPY attempts tepid recovery above 146.00

USD/JPY attempts tepid recovery above 146.00

USD/JPY kicks off the new week on a weaker note, though it manages to stage a tepid recovery above 146.00 early Monday. The global carnage, amid the mounting risk of a recession and a trade war led by Trump's sweeping tariffs, keeps the safe-haven Japanese Yen underpinned at the expense of the US Dollar.

USD/JPY News
Gold buyers refuse to give up amid global trade war and recession risks

Gold buyers refuse to give up amid global trade war and recession risks

Gold price is holding the quick turnaround from one-month lows of $2,971, consolidating the recent downward spiral. The extension of the risk-off market profile into Asia this Monday revives the safe-haven demand for Gold price.

Gold News
Bitcoin could be the winner in the ongoing trade war after showing signs of decoupling from stocks

Bitcoin could be the winner in the ongoing trade war after showing signs of decoupling from stocks

Bitcoin traded above $84,000 on Friday, showing strength despite the stock market experiencing significant declines. The market reaction stems from United States President Donald Trump's clash with the Federal Reserve Chairman Jerome Powell over interest rate decisions.

Read more
Strategic implications of “Liberation Day”

Strategic implications of “Liberation Day”

Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025