|

WTI: Bulls stepping in on Chinese whispers, 23.6% fibo retracement supports, for now

  • WTI has found demand at a key support level at the 23.6% fibo retracement of the Oct decline. 
  • WTI is currently trading at 52.04, down from a high of 52.47 and up from a low of 50.87. 

WTI is stablising in the downside correction of the recent recovery highs at 53.54. The EIA, (The U.S. Energy Information Administration ), cut its 2019 Brent oil-price forecast and issued its  2020 views. The EIA cut its previous 2019 price forecast by 0.8% for Brent crude to $60.52 a barrel and said it expects to see an average of $64.76 in 2020, keeping its forecast for West Texas Intermediate crude prices at $54.19 for 2019. The EIA expects to see an average of $60.76 in 2020 and also forecast U.S. crude output of 12.07 million barrels a day this year. Output next year is expected to average 12.86 million barrels a day. 

Elsewhere, there has been some positive sentiment from China. China is countering a run of weak data and has been promising a number of stimulus measures. This support risky asset classes such as oil. The suggested measures have included larger tax cuts and sufficient monetary support. China's PBoC and the MoF alongside a stable CNY overnight (currently at a 5-month high) is supporting risk appetite and the price of oil. 

Much more needed to convince markets

Analysts at TD Securities pointed out, however, that "we will need to see concrete signs of action before markets are convinced, but the comments are in the right direction," analysts at TD Securities argued, "In particular, they are focusing on areas of pressure such as autos, weakness in private companies as well as highlighting prospects for major and broad-based tax cuts." However, the trade data earlier this week were poorer-than expected and have been underlining worries that the country’s economy is locked in a downturn which should be a warning to the bulls.

WTI levels

  • Support levels: 51.30 50.26 49.59 
  • Resistance levels: 52.41 53.01 53.68 

From a technical standpoint, that daily doji had started to play out this week but the downside has been held up at the 23.6% fibo retracement around 50.50. However, a break there should encourage additional speculative shorts as the bulls step aside. Bears can hunt down the psychological 50 figure and then 48.20 as a key confluence support area to target.

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:

Editor's Picks

GBP/USD gains traction above 1.3400 as softer US CPI dampens Fed rate hike expectations

The GBP/USD pair gains ground to near 1.3405 during the early Asian session on Wednesday. The US dollar weakens against the British Pound as softer-than-expected US inflation in June tempered expectations for US Federal Reserve policy tightening. The release of the US June Producer Price Index report will be in the spotlight later in the day. 

EUR/USD gathers strength above 1.1400 after soft US inflation data

The EUR/USD pair gains ground to near 1.1425 during the early Asian trading hours on Wednesday. The US Dollar weakens against the Euro as softer-than-expected US inflation data temporarily eased pressure on the Federal Reserve. Traders will take more cues from the US Producer Price Index report, which is due on Wednesday. 

Gold remains a ‘sell-on-rise’ trade amid US-Iran hostilities

Gold is resuming its downtrend toward two-week lows near $3,985 early Wednesday, following a temporary pullback seen on Tuesday, as there seems to be no end to the renewed hostilities between the United States and Iran concerning the Strait of Hormuz.

Hyperliquid representatives, Trade[XYZ] meet SEC Crypto Task Force to discuss digital asset regulation

The US Securities and Exchange Commission's Crypto Task Force met with representatives from the Hyperliquid Policy Center, XYZ Ltd., which operates Trade[XYZ] and Sullivan & Cromwell LLP to discuss regulatory approaches to digital assets, according to a memorandum released Tuesday.

2% and nothing else: Why Warsh gave Congress three hours of Greenspan

The Federal Reserve Chair who wants the institution to say less spent Tuesday legally required to say more, on the one morning the data handed him something pleasant to say. June's Consumer Price Index fell 0.4% on the month, the steepest single-month decline since April 2020.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.