|

WTI bulls move deeper into critical daily resistance

  • US oil is fundamentally firm, but technicals momentum is slowing at daily resistance.
  • FOMC and GDP data from the US will be key events.

In the open, US West Texas Intermediate (WTI) crude prices are bid +0.26% at $72.21 at the time of writing. 

Energy markets have posted a strong recovery of late.

''Firm demand hindered shale supply and the cautious monthly increase in supply from OPEC+ should not be enough to prevent a deep deficit in the coming month, which should continue to fuel stronger prices and tightening spreads,'' analysts at TD Securities said.

WTI edged higher on Friday to close up by a modest 0.46%, extending deeper into daily resistance in a strong corrective recovery from Monday's steep slide and Tuesday lows of $65.11. 

''With officials from well-vaccinated countries reluctant to reinstate harsh lockdown measures, the risk of demand growth faltering is diminishing,'' analysts at ANZ bank explained.

''In fact, gasoline demand in several major regions has returned to pre-pandemic levels amid rising road traffic data. Even the jet fuel market is showing signs of improvement.''

FOMC & key US data

On the cards for the week ahead, the Federal Open Market Committee will be key.

The Federal Reserve will have to deal with the reality of above-trend growth and higher than first expected inflationary pressures.

The idea of tapering will emerge in the fourth quarter of 2021, as well as the likelihood of the first hike coming in 4Q22, markets will be on edge. 

We also have 2Q21 Gross Domestic Product growth this week. This is expected at 8-9% quarter-on-quarter annualized.

June readings for personal consumption and the PCE deflator, all arrive strong, the US dollar should continue to gain.

Subsequently, this could weigh on the commodity complex if the US dollar rallies. 

However, oil prices were be expected to remain robust given the pace of the US economic recovery.  

WTI technical analysis

Technically, the price is pressuring the critical resistance with 72.30 on the radar for the open.

A break there will level the bulls in good stead for a higher high in the coming days.

The 78.6% Fibonacci retracement of the prior daily bearish leg is located at 73.30.

Meanwhile, the monthly 61.8% Fibonacci retracement in the 64.50/60s support area is compelling:

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD trims gains, nears 1.1700

The EUR/USD pair eases in the American afternoon and approaches the 1.1700 mark. The pair surged earlier in the day after the ECB left interest rates unchanged and upwardly revised inflation and growth figures. The US CPI rose 2.7% YoY in November, nearing Fed’s goal.

GBP/USD returns to 1.3370 after BoE, US CPI

The GBP/USD pair jumped towards the 1.3440 early in the day, following the BoE decision to cut rates, and US CPI data, which was much softer than anticipated. The US Dollar, however, managed to regain the ground lost during US trading hours.

Gold extends its consolidative phase around $4,330

The bright metal cannot attract speculative interest on Thursday, despite central banks announcements and the United States latest inflation update. XAU/USD is stuck around $4,330, confined to a tight intraday range.

Crypto Today: Bitcoin, Ethereum hold steady while XRP slides amid mixed ETF flows

Bitcoin eyes short-term breakout above $87,000, underpinned by a significant increase in ETF inflows. Ethereum defends support around $2,800 as mild ETF outflows suppress its recovery. XRP holds above at $1.82 amid bearish technical signals and persistent inflows into ETFs.

Bank of England cuts rates in heavily divided decision

The Bank of England has cut rates to 3.75%, but the decision was more hawkish than expected, leaving market rates higher and sterling slightly stronger. It's a close call whether the Bank cuts again in February or March.

Ripple holds $1.82 support as low retail demand weighs on the token

Ripple (XRP) is trading between a key support at $1.82 and resistance at $2.00 at the time of writing on Thursday, reflecting the lethargic sentiment in the broader cryptocurrency market.