|

WTI slumps on soft demand from US and China as traders brace for US CPI

  • End of summer vacations in the US leads to lower demand. China’s gradual recovery after lifting stringent Covid-19 measures further diminishes demand.
  • Saudi Arabia and Russia extending their crude oil production cushioned WTI’s price drop.
  • WTI Technical: A ‘spinning-top’ candlestick from Monday implies bullish momentum might wane.

Western Texas Intermediate (WTI), the US crude oil benchmark, fell 0.16% on Monday due to traders bracing for weaker demand from the United States (US) and China. Hence, WTI is trading at $82.45, below its opening price, after hitting a daily high of $83.26.

Seasonal demand dip and China’s sluggish recovery pressure oil, though Saudi Arabia’s production cut offers some support

Market sentiment remains upbeat as Wall Street closed with gains. The end of summer vacations in the US is one of the drivers that weakened oil prices as a result of lower demand due to seasonal factors. In the meantime, China’s struggles to recover after lifting Covid-19 zero-tolerance restrictions supported oil’s rally, but its recovery slowed as the year progressed.

Meanwhile, after detecting a leak in central Poland, a pipeline that delivers oil from Poland to Europe would resume oil flows on Tuesday, easing worries about supply constraints.

Although those reasons would weigh WTI’s price, Saudi Arabia’s extension of its 1 million crude oil production cut to September cushioned the oil price fall. That, alongside Russia’s commitment to cut its exports by 300K barrels per day (bpd).

WTI traders focus the rest of the week on the US Consumer Price Index (CPI) report for July. A rise in prices in the United States (US), could trigger a hawkish reaction by the US Federal Reserve (Fed), which could remain increasing rates, augmenting demand for the greenback. Consequently, a strong US Dollar would weigh on US Dolllar-denominated assets, like WTI.

WTI Price Analysis: Technical outlook

From a daily chart perspective, WTI is in an uptrend though it remains shy of breaking above the $84.00 per barrel figure, which could exacerbate a test of the November 11, 2022, daily high of $90.08. Nevertheless, Monday’s reversal day printed a ‘spinning-top’ candlestick, suggesting that buyers are losing momentum, ahead of breaking above the year-to-date (YTD) high of $83.49. That said, if WTI breaks above the latter, that would expose $84.00, followed by the psychological $84.50 area, before testing $85.00. Conversely, if WTI drops below Monday’s low of $81.57, that could trigger a correction towards the $80.00 per barrel, followed by the 20-day EMA.

WTI Daily chart

WTI US OIL

Overview
Today last price82.19
Today Daily Change-0.11
Today Daily Change %-0.13
Today daily open82.3
 
Trends
Daily SMA2077.85
Daily SMA5073.5
Daily SMA10074.05
Daily SMA20076.43
 
Levels
Previous Daily High82.88
Previous Daily Low81.24
Previous Weekly High82.88
Previous Weekly Low78.49
Previous Monthly High81.78
Previous Monthly Low69.77
Daily Fibonacci 38.2%82.25
Daily Fibonacci 61.8%81.86
Daily Pivot Point S181.4
Daily Pivot Point S280.5
Daily Pivot Point S379.76
Daily Pivot Point R183.04
Daily Pivot Point R283.78
Daily Pivot Point R384.69

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.