WTI Price Analysis: WTI cleared daily gains amid stronger USD

On Thursday, the West Texas Intermediate (WTI) barrel failed to maintain its upwards momentum, which took the price to a high of $76.11. A cautious market environment and a strong Dollar are the main ones responsible for limiting the WTI’s upwards potential, while the reports of  Oil American stocks may limit the downside.

 The American Petroleum Institute (API) stated that Crude Oil stocks fell in the week ending July 14. In addition, the US Energy Information Administration (EIA) reported that Crude Oil Stocks fell by 708,000 barrels which lifted the black gold’s price.

However, the USD recovered amid lower-than-expected Jobless Claims in the week ending on July 14, meaning fewer people filed for unemployment benefits. The figure came in at 228K, lower than the 242K expected and the previous figure of 237K. 

As a reaction, US Treasury yields advanced across the board, meaning that markets are betting on a more aggressive Federal Reserve (Fed). The 2-year yield displays nearly 2% gains and stands at 4.88%, while the 5 and 10-year yields rose to 4.10% and 3.84% showing more than 2% increase. As for now, according to the CME FedWatch tool, markets largely discounted a 25 basis point (bps) hike for next week's meeting, but the odds of a hike past July still remain low. Its worth noticing that higher rates are negatively correlated with Oil prices as they cool down economic activity and lower energy demand.

WTI Levels to watch

According to the daily chart, the technical outlook is neutral to bearish for the short term. Bulls are struggling to gain momentum, and the price is capped by the 200-day Simple Moving Average (SMA) so further downside may be on the horizon. In addition, indicators are losing strength, with the Relative Strength Index (RSI) displaying a negative slope near its midline in positive territory while the Moving Average Convergence Divergence (MACD) prints lower green bars. 

Support levels: $73.50 (100-day SMA), $72.53 (20-day SMA), $72.00.
Resistance levels: $76.00, $76.90 (200-day SMA), $78.00.

WTI Daily chart