WTI stays pressured towards $87.00 at six-month low amid recession fears, focus on US NFP


  • WTI crude oil holds lower ground near six-month bottom after declining for the last four days.
  • Fears of economic slowdown, central bank aggression outweigh geopolitical woes linked to China, Russia.
  • US jobs report for July, developments surrounding China will be important for fresh impulse.

WTI crude oil prices remain depressed at the lowest levels in six months as fears of economic slowdown supersede geopolitical crisis. That said, the black gold seesaws around $87.20-30, after refreshing the multi-day low with the $87.18 mark, as traders await the US employment data on Friday.

The energy benchmark dropped during the last four consecutive days to print the six-month bottom the previous day as mixed statistics from the major economies join aggressive monetary policy actions to highlight the recession fears.

It’s worth noting that the Bank of England’s (BOE) open acceptance of the economic slowdown in late 2022 amplified the fears. On the same line was Cleveland Fed President Loretta Mester who said that recession risks have increased in the US.

It’s worth noting that the US Treasury yields continued to portray the risk of recession as the difference between the 10-year and 2-year bond coupons remain the widest since 2000. That said, the US 10-year Treasury yields closed near 2.069% while the 2-year counterpart dropped to 3.049% at the latest.

Alternatively, a smaller output increase by the Organization of the Petroleum Exporting Countries (OPEC) and allies, collectively known as OPEC+, should have helped the oil buyers but did not. The reason could be linked to the weekly stockpile data from the US Energy Information Administration (EIA) marked a notable increase in inventories. “Crude inventories rose by 4.5 million barrels in the week to July 29 to 426.6 million barrels, the EIA said, compared with analysts' expectations in a Reuters poll for a 600,000-barrel drop,” stated the news.

Also likely to have challenged the oil prices are headlines surrounding China and Russia. Recently, the dragon nation’s heavy military drills near the Taiwan border gained major attention and challenges the global trade channel, which in turn should mark further strain on the supply chain and might create an imbalance in the oil supply-demand matrix. However, the same could also escalate the recession fears and may not be that effective. On the other hand, Russia’s sustained invasion of Ukraine has been old news and hence gained little attention from the markets.

Amid these plays, the oil bears keep reins ahead of the key US employment data for July that will be crucial for determining near-term market moves.

Also read: Nonfarm Payrolls Preview: High expectations set deal the dollar a blow, create buying opportunity

Technical analysis

A daily close below July’s low of $88.34 directs bears towards October 2021 peak near $85.00.

Additional important levels

Overview
Today last price 87.28
Today Daily Change -3.14
Today Daily Change % -3.47%
Today daily open 90.42
 
Trends
Daily SMA20 96.36
Daily SMA50 105.43
Daily SMA100 104.88
Daily SMA200 94.14
 
Levels
Previous Daily High 95.87
Previous Daily Low 89.89
Previous Weekly High 100.95
Previous Weekly Low 92.44
Previous Monthly High 109.54
Previous Monthly Low 88.34
Daily Fibonacci 38.2% 92.17
Daily Fibonacci 61.8% 93.59
Daily Pivot Point S1 88.25
Daily Pivot Point S2 86.07
Daily Pivot Point S3 82.26
Daily Pivot Point R1 94.23
Daily Pivot Point R2 98.05
Daily Pivot Point R3 100.22

 

 

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