WTI defies gravity and ends firmly in the green, below 20-DMA target

Despite the International Energy Agency on Friday lowering its forecast for 2019 demand growth, West Texas Intermediate travelled higher between a range of $52.40 and $54.89, ending on Wall Street 2.92% in the green to around $54.35 on signs that OPEC oil ministers are committing to market balances.

The International Energy Agency on Friday lowered its forecast for 2019 demand growth by 100,000 barrels a day to 1.1 million barrels a day, citing the weaker prospects for the global economy noted which also prompted the agency to lower its  2020 forecast by 50,000 barrels a day to 1.3 million barrels a day as well. 

Bulls take back control

Regardless, WTI for September delivery climbed $1.96, or 3.7%, to end at $54.50 a barrel on the New York Mercantile Exchange. The contract ended the week with a 2.1% loss. Earlier in the week, contributing to the lower weekly price, the same contract fell hard by 4.7% to $51.09 for its lowest settlement for the contract since Jan. 14, 2019.

However, there are signals that OPEC oil ministers want to stabilise the price from here, feeling the pain associated with crumbling prices. "With the JMMC scheduled to take place in Abu Dhabi by mid-September, we suspect that OPEC signals will help to ease fears that the US-China trade war will see a market surplus re-emerge," analysts at TD Securities explained. 

"In the meantime, however, we note that the crude market has likely continued to tighten as OPEC production has remained constrained in July, and non-OPEC production is growing at a slower pace than many had expected. At the same time, however, momentum indicators continue to fire downside signals on all cylinders in WTI — leading CTAs to add to their shorts. That being said, we estimate that algorithmic trend followers have reached their target short position in Brent crude, suggesting less downside flow in Brent in the immediate future."

WTI levels

Technically, the price is back above the 61.8%% Fibo of the late Dec to 2019 range and has taken on the 50% Fibo of the same range, albeit still drowning below the 50 and 200 daily moving averages. Bears can target below the 50 handle on an escalation of the trade wars - 47.56 comes in as the 78.6% Fibo. Bulls can target the 20-day moving average at 55.50 and then a run towards 56.80 and then 60.50.