WTI Price Analysis: Awaits acceptance above 21-DMA on the road to recovery
- WTI price is resuming the uptrend after correcting sharply on Tuesday.
- Weaker US dollar, lower inventories offer support to the US oil.
- Acceptance above 21-DMA at $103.24 is critical for resuming the uptrend.
WTI (NYMEX futures) is looking to extend the rebound above the $103 mark, having found strong bids below the $102 region.
The renewed upside in the US oil comes after the black gold tumbled roughly 5% on global growth concerns, which stoked fears over the demand for oil and its product. The International Monetary Fund (IMF) cut the 2022 global growth forecast by nearly 1 percentage point on Tuesday.
Investors seem to have looked past the IMF forecasts, as a 4.5 million barrels drawdown in the US API weekly crude stockpiles, Libyan fuel outage and lower OPEC+ output flare-up supply-side concerns and offer the much-needed support to the price of WTI.
Further, oil price also finds support from the gradual reopening of Shanghai city from the covid lockdown. Meanwhile, a broad-based retreat in the US dollar also remains one of the key reasons behind the rebound in the USD-sensitive oil.
From a near-term technical perspective, WTI’s corrective pullback saw the price close below the flattish 21-Daily Moving Average (DMA) at $103.24 for the first time this week.
With the 14-day Relative Strength Index (RSI), however, still holding above the midline, buyers remain hopeful for a meaningful recovery.
Therefore, daily closing above the latter is needed to trigger a sustained move higher towards the previous day’s high of $108.23. Ahead of that, the $105 round number will emerge as a tough nut to crack for bulls.
WTI: Daily chart
On the other side, if bulls fail to find a foothold above the 21-DMA, then a test of the 50-DMA support at $100.85 will be inevitable.
The next significant downside target will be then envisioned at the $100.00 psychological level.
WTI: Additional levels to watch
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
