WTI Price Analysis: WTI retreats towards $79.00 ahead of Fed decision

WTI found support at a daily low of $78.66 and then recovered above $79.00 still holding daily losses.
FOMC decision will be the session’s highlight – expected to deliver a 25 bps hike.
EIA Crude Oil stocks fell in the third week of July by 0.6M, lower than expected.

Patricio Martín FXStreet

The West Texas Intermediate (WTI) barrel trades soft on Wednesday as markets await the Federal Reserve (Fed) decision. In addition, the Energy Information Administration (EIA) reported a lower-than-expected decline in inventories in the week ending on July 21 and seem to be weighing on Oil prices.

On the other hand, the USD as per the DXY Index is declining, and US Treasury yields are decreasing ahead of the Federal Reserve's (Fed) announcement later in the session. Markets have already priced in a 25 basis point (bps) increase but are placing bets on a low likelihood of a similar increase in September (20%) and November (45%), respectively. Investors will need to model their expectations for the upcoming meetings based on the messaging regarding forward guidance since there won't be an updated macro forecast or dot plot. Its worth noticing that higher rates tend to cool down economic activity so the bets as to what the Federal Reserve will do following the decision may affect the WTI price dynamics.

On a positive note, the announcement on Tuesday that the Chinese government is to step up economic stimulus to bolster economic activity could provide support to the WTI as China is the largest Oil importer in the world, so a stronger economic activity would imply a greater Oil demand.

WTI Levels to watch

The daily chart of the WTI suggest a neutral to bullish outlook for the short term as buyers seem to be losing steam. The Relative Strength Index (RSI) has a neutral slope near the overbought threshold, while the Moving Average Convergence Divergence (MACD) printed a lower green, implying that the bulls are losing steam.

Resistance levels: $80.00,$81.00,$82.60.
Support levels: $76.70 (200-day SMA), $74.59 (20-day SMA),$73.50 (100-day SMA).

WTI Daily chart

WTI US OIL

Overview
Today last price	79.13
Today Daily Change	-0.10
Today Daily Change %	-0.13
Today daily open	79.23

Trends
Daily SMA20	73.99
Daily SMA50	72.21
Daily SMA100	73.49
Daily SMA200	76.61

Levels
Previous Daily High	79.78
Previous Daily Low	78.19
Previous Weekly High	77.23
Previous Weekly Low	73.78
Previous Monthly High	74.36
Previous Monthly Low	66.95
Daily Fibonacci 38.2%	79.18
Daily Fibonacci 61.8%	78.8
Daily Pivot Point S1	78.35
Daily Pivot Point S2	77.48
Daily Pivot Point S3	76.77
Daily Pivot Point R1	79.94
Daily Pivot Point R2	80.65
Daily Pivot Point R3	81.53

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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