WTI Price Analysis: WTI clears daily gains amid a weaker USD, OPEC production cuts

WTI found support at $85.32 and then settled around $85.50.
Investors continue to asses the US’s August NFPs released on Friday.
OPEC expected to extend its voluntary production cuts.

Patricio Martín FXStreet

The West Texas Intermediate (WTI) barrel cleared daily losses and traded neutral in the $85.50 - $86.00 zone near multi-month highs, benefited by a softer USD. The Greenback is trading weak against most of its rivals while investors digest Friday’s Nonfarm Payroll (NFP) figures. No relevant economic data will be released during the session, and the focus will shift to Wednesday’s ISM Services PMI figures from August.

NFPs revealed that headline employment grew, but so did the unemployment rate, and wage inflation measured by the Average Hourly Earnings decelerated. Signs of the labour market cooling may ease the pressure on the Federal Reserve (Fed) to continue hiking, and markets started to price in a less aggressive stance for the remainder of the year. As for now, the CME FedWatch tool indicates that the odds of a pause in September remain high while the probabilities of a hike in November and December decreased to nearly 35%, and those dovish bets explain the USD weakness. Interest rates and Oil prices tend to be negatively correlated, so as the Fed approaches the end of its tightening cycle, the WTI may gain further traction.

In addition, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are expected to extend their voluntary production cuts into October, which could contribute to a tighter global supply. Oil prices may get an additional boost.

WTI Levels to watch

Based on the daily chart assessment, a bullish outlook is noted for WTI in the near future. The Relative Strength Index (RSI) resides above its midline in the positive territory near the overbought threshold. It is further validated by the green bars on the Moving Average Convergence Divergence (MACD), indicating a robust bullish momentum. Moreover, the pair is above the 20,100,200-day Simple Moving Average (SMA), pointing towards the prevailing strength of the bulls in the larger context.

Support levels: $85.30, $84.00, $83.00.

Resistance levels: $87.00, $88.00, $89.00

WTI Daily Chart

WTI US OIL

Overview
Today last price	85.52
Today Daily Change	-0.05
Today Daily Change %	-0.06
Today daily open	85.57

Trends
Daily SMA20	81.16
Daily SMA50	77.73
Daily SMA100	75.14
Daily SMA200	76.03

Levels
Previous Daily High	85.57
Previous Daily Low	83.09
Previous Weekly High	85.57
Previous Weekly Low	79.21
Previous Monthly High	84.32
Previous Monthly Low	77.53
Daily Fibonacci 38.2%	84.63
Daily Fibonacci 61.8%	84.04
Daily Pivot Point S1	83.92
Daily Pivot Point S2	82.27
Daily Pivot Point S3	81.44
Daily Pivot Point R1	86.39
Daily Pivot Point R2	87.22
Daily Pivot Point R3	88.87

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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