WTI justifies Thursday’s Doji to march towards $69.00 amid cautious optimism

WTI crude oil prints mild gains around $68.65 as it pares the biggest weekly loss since early December on Friday. In doing so, the energy benchmark justifies the price-positive technical details while also taking clues from the market’s cautious optimism.

That said, the bullish Doji candlestick on the daily chart formation joins the oversold RSI (14) line to favor the WTI crude oil’s corrective bounce off the lowest levels since December 2021. Adding strength to the corrective bounce could be the US Dollar’s latest retreat, as well as hopes of overcoming the fears of the 2008 financial crisis.

It should be noted that the headlines suggesting China’s gradual economic recovery, shared by Bloomberg, join the talks suggesting a continuation of the Oil supply accord by the major energy producers favor the black gold buyers.

However, US President Joe Biden’s push for using the Strategic Petroleum Reserve (SPR) joins the looming economic recession woes, emanating from the US and European banks, seem to weigh on the WTI prices. Earlier in the day, US Energy Envoy Amos J Hochstein mentioned that US President Biden is committed to replenishing strategic oil reserves. 

It’s worth noting that comments from Saudi National Bank's Chairman, Ammar Al Khudairy, conveying the “sound” conditions of Credit Suisse join the major US banks’ efforts to help California-based First Republic Bank to avoid a liquidity crunch to favor the risk-on mood. On the same line was the news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity, as well as Reuters quoting anonymous sources to confirm that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, US Treasury Secretary Janet Yellen’s assurance over the US banking industry’s health and European Central Bank’s (ECB) 50 bps rate hike, matching expectations, also favored the sentiment and allowed the latest run-up in the Oil price.

On the contrary, a light calendar and the market’s lack of confidence in the global policymakers’ efforts to push back the financial crisis seem to weigh on the Oil price.

While portraying the mood, US 10-year and two-year Treasury bond yields struggle for clear directions as the previous day’s rebound fails to supersede the two-week downtrend. However, Wall Street closed in the green with more than 1.0% gains by each of the benchmark indices while S&P 500 Futures remain lackluster at the latest.

Moving on, traders should keep their eyes on the next week’s Federal Open Market Committee (FOMC) monetary policy meeting. Ahead of that, preliminary readings of the US Michigan Consumer Sentiment Index for March and the UoM 5-year Consumer Inflation Expectations for the said month will be important for clear directions.

Technical analysis

Thursday’s bullish Doji at the multi-day low joins the oversold RSI (14) conditions to suggest the black gold’s further recovery. However, the WTI bulls remain off the table unless witnessing a clear upside break of the December 2022 low surrounding $70.30.