WTI shoots higher, rejected near $66 in a 38.2% weekly Fib retracement

The price of oil was higher on Monday, ending on Wall Street up near 5.6% in the case of West Texas Intermediate.

 A weaker US dollar falling back bullish long term bullish territory and firmer US stocks helped to lift the commodity and energy complex. 

WTI spot was at $65.40 by the close of play on Wall Street after climbing from a low of $61.76 and reaching a high of $65.97. 

The dollar index DXY, which measures the currency against six peers, was down 0.5% to 93 the figure after hitting its highest level in more than nine months on Friday.

The drop in the value of the greenback was making crude less expensive for holders of other currencies.

Meanwhile, the MSCI world equity index which tracks shares in 50 countries, was up, after having its biggest weekly fall since June last week and the S&P 500 was printing a fresh record high. 

Meanwhile, however, many nations are responding to the rising coronavirus infection rate by introducing new travel restrictions which is a headwind for energy prices. 

China, the world's largest oil importer, has imposed new restrictions, which is affecting shipping and global supply chains.

However, ''China's 'Zero-Covid' strategy appears to have quickly contained the outbreak, suggesting that recent disruptions in the Middle Kingdom could prove short-lived,'' analysts at TD Securities argued.

''This suggests that the impact on Chinese energy demand may be underwhelming relative to recent fears, which argues that prices should return on a rising trajectory.''

WTI technical analysis

The price has rallied to break a 50% mean reversion of the mid-August rout which has equated to a near 38.2% of the weekly decline from the end of last month.

In doing so, the price is testing the daily resistance structure marled by old support near 66 the figure.

This is an area that would be expected to hold initial tests and potentially lead to subsequent declines in the broader bearish trend.

With that being said, there are prospects of a deeper correction of the weekly drop if the price beaks 66.50. The 67.50 before the weekly counter-trendline will be the biggest barrier to regain bullish territory in the 70s.