- WTI bulls take on the $40 handle in a string upside correction.
- Bears will be lurking overhead, seeking opportunities to catch the next wave to the downside.
West Texas Intermediate has run up a strong correction of the broader bearish trends on the monthly and weekly charts.
At the time of writing, a barrel of oil is trading at $39.98, higher by 4.14% having rallied from a low of $38.38 to print a fresh daily high of $40.20.
Risk appetite has improved and, in addition, the latest API data showed a heavy decline in oil inventories.
Additionally, Hurricane Sally’s expected landfall on the US Gulf Coast had led to more than a quarter of US offshore oil and gas production shuttering as well as key exporting ports.
The storm’s trajectory had shifted east toward western Alabama, at least sparing some Gulf Coast refineries from high winds.
The unpredictability about oil production in the Gulf was bullish for oil prices.
Meanwhile, headlines have also suggested OPEC+ compliance was above 100% for August.
The compliance data in particular bodes well heading into the JMMC meeting, as traders were concerned that the group was losing their grasp on the historic production curtailment deal,
analysts at TD Securities explained.
The analysts at TDS argued, however, that demand-side expectations remain a key worry:
Notwithstanding the marginal improvements, demand-side expectations remain a key worry moving forward, as the IEA and OPEC have both trimmed their forecasts for the rest of the year.
For the moment, considering Saudi Arabia's significant influence in the region, and the recently negative tone on demand by OPEC and other forecasting agencies, we suspect that the JMMC will mitigate downside risks, particularly as further weakness may also see an increase in voluntary OPEC+ cuts.
WTI levels
The price action has been one more or less one way since the start of the week, taking out the 38.2% Fibonacci of the daily bearish impulse and prior support at $39.
The bulls will now need to overcome structure at the 3rd Sep lows overhead at $40.20/80 which meets a 61.8% Fib of the same daily bearish impulse.
Failures here will give rise to the downside prospects in what would be expected to be the start of a new wave to the downside towards weekly and monthly demand zones in the $34 area.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remains under pressure above 0.6400
AUD/USD managed to regain some composure and rebounded markedly from Tuesday’s YTD lows in the sub-0.6400 region ahead of the release of the Australian labour market report on Thursday.
EUR/USD faces decent contention around 1.0600
The knee-jerk in the Greenback reignited some buying interest in the risk complex and pushed EUR/USD to three-day highs near 1.0680, rapidly leaving behind the recent yearly low around 1.0600.
Gold eases despite risk-off mood
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding the Iran-Israel conflict.
Ethereum trades around the $3,000 support following a surge in validator queue
Ethereum (ETH) continued a sideways movement on Wednesday as investors seemed to be waiting for an upward or downward price catalyst. Despite the price stagnancy, the ETH validator queue - possibly fueled by the DeFi restaking boom - rose sharply.
Markets stabilize after Powell rules out rate hike, but the signs don’t look good
Markets are volatile right now; however, a relative calm has descended on the market and US. US stocks are down a touch, but the Vix is lower, US Treasury yields are lower, and the dollar is mostly lower vs. its G10 FX counterparts.