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WTI finds support above $82.00 amid Chinese deflation concern

  • WTI prices finds some support above $82.00 during the early Asian session on Monday.
  • The IEA forecasts a 2.2 million bpd increase in demand in 2023; OPEC anticipates a 2.44 million bpd increase. 
  • The Chinese data released last week raised concern about the pace of China's post-pandemic recovery.
  • Oil traders will closely watch US Retail Sales, FOMC Minutes, API/EIA oil data.

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around the $82.30 mark so far on Monday. The deflation in China exerts some selling pressure on oil price. Meanwhile, the positive outlook of the Organisation of the Petroleum Exporting Countries (OPEC) regarding oil demand for the upcoming year and its global economic growth forecasts might cap the downside for WTI prices.

The Chinese inflation data released last week raised concern about the pace of China's post-pandemic recovery. The Consumer Price Index (CPI) YoY fell 0.3% in July from 0% prior. This figure indicates the deflation in China. This, in turn, exerts pressure on WTI prices as China is the major oil consumer in the world.

Furthermore, US President Joe Biden issued an executive order last week prohibiting new US investments in China in sensitive technologies. That said, the US intends to target only Chinese companies that generate more than 50% of their revenue from quantum computation and artificial intelligence (AI). US investors expressed concern that Beijing might retaliate or refrain from purchasing American technology. Investors will keep an eye on the headlines in the US-China relationship.

On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) and EIA stated that the outlook for the global oil market in the second half of the year is positive. Summer flight travel, increased oil consumption for power generation, and rising Chinese petrochemical activity are the main drivers of the IEA's forecast of a 2.2 million bpd increase in demand in 2023. While OPEC anticipates a 2.44 million bpd increase.

Additionally, OPEC raised its forecast for global economic growth to 2.7% from 2.6%, and revised the figure for next year to 2.6%, stating that growth in the United States, Brazil, and Russia in the first half of 2023 exceeded initial expectations.

Meanwhile, tighter supply due to the prolonged voluntary limits on Saudi Arabian output has underpinned a rally in oil prices. Saudi Arabia's crude oil output fell from 968,000 bpd in June to 9.021 million bpd in July. Last week, Saudi Arabia announced it would extend its voluntary oil output cut of one million barrels per day (bpd) through September. In the meantime, Russia's oil exports will also decrease by 300,000 bps in September.

Looking ahead, oil traders will closely watch the US Retail Sales due on Tuesday. The figure is expected to rise from 0.2% to 0.4% on a monthly basis. Market participants will also monitor the FOMC minutes and the Fed officials’s comments for the Jackson Hole Symposium.

Additionally, the American Petroleum Institute's (API) Weekly Crude Oil Stock and EIA Crude Oil Stocks for the week ending August 11 will be released on Wednesday and Thursday, respectively. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI price.

WTI US OIL

Overview
Today last price82.35
Today Daily Change-0.19
Today Daily Change %-0.23
Today daily open82.54
 
Trends
Daily SMA2079.73
Daily SMA5074.72
Daily SMA10074.75
Daily SMA20076.31
 
Levels
Previous Daily High83.27
Previous Daily Low81.82
Previous Weekly High84.32
Previous Weekly Low79.66
Previous Monthly High81.78
Previous Monthly Low69.77
Daily Fibonacci 38.2%82.72
Daily Fibonacci 61.8%82.38
Daily Pivot Point S181.82
Daily Pivot Point S281.1
Daily Pivot Point S380.37
Daily Pivot Point R183.27
Daily Pivot Point R283.99
Daily Pivot Point R384.71

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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