WTI Crude Oil (US Oil) Analysis
Key Points: -
- WTI crude oil is facing difficulty in gaining momentum around the $74.20 level during the Asian session on Tuesday.
- The release of a weaker Chinese growth figure has sparked concerns regarding a potential economic slowdown in the country.
- Crude oil prices have experienced a rise in recent weeks due to supply cuts by Saudi Arabia and a decrease in inflationary pressures in the United States.
Today's Scenario: -
WTI (Western Texas Intermediate), the benchmark for US crude oil, is currently trading around the $74.20 level on Tuesday. The price of WTI has retreated from around $77 following the release of a weaker-than-expected Chinese growth figure. This has raised concerns about a potential economic slowdown in the second-largest oil consumer globally.
According to the National Bureau of Statistics, the Chinese Gross Domestic Product (GDP) growth rate was reported at 6.3% annually, falling short of expectations at 7.3% and below the previous figure of 4.5%. Although the annual rate represents the fastest pace since the second quarter of 2021, it is significantly influenced by the COVID-19 lockdowns implemented in Shanghai and other major cities last year.
In terms of US-China relations, John Kerry, the US climate envoy, met with China's climate diplomacy representative, Xie Zhenhua, on Tuesday, aiming to rebuild trust between the two largest economies. Oil traders will closely monitor these developments as they could provide fresh impetus to the WTI price. However, any renewed tensions between the US and China could potentially limit the upside potential for crude oil prices.
On a positive note, Saudi Arabia's supply cuts and the easing inflationary pressures in the US have contributed to the recent boost in crude oil prices. Furthermore, Russian oil exports are expected to decrease by 100,000-200,000 barrels per day (bpd) next month, indicating that Moscow is fulfilling its commitment to reduce output in line with Saudi Arabia.
Looking ahead, the release of July's US Retail Sales data will be of importance. Additionally, oil traders will analyze the weekly official oil inventory data published by the Energy Information Administration (EIA) on Wednesday to identify opportunities within the WTI crude oil market.
Diagram of WTI Crude Oil (US Oil): -
Economic Events: -
Buy Scenario: -
WTI crude oil is currently holding onto slight gains around $74.30, showing a 0.33% increase heading into the European session on Tuesday. This rebound comes after finding support at the 10-day moving average (DMA) and marks the first daily gain in three days.
In addition to the support provided by the 10-DMA, the bullish signals from the Moving Average Convergence Divergence (MACD) indicator also support the positive bias surrounding the oil price.
However, there is a notable resistance-turned-support trendline extending from late June, which currently stands around $74.40. This level acts as an immediate obstacle for further upside in the price of oil.
If the price manages to break above the aforementioned resistance, the round figures of $75.00 and $76.00 are likely to attract buyers, followed by the 200-DMA hurdle at $76.85. Additionally, the monthly high near $77.20 also acts as a potential upside barrier.
It is important to consider that the late April swing high around $79.20 and the psychological level of $80.00 will pose challenges for oil buyers before allowing them to take control. Till we do not advise to buy in WTI US oil.
Selling Scenario: -
On the downside, a daily close below the 10-DMA support level of approximately $74.10 would require confirmation from the psychological level of $74.00 and the 100-DMA, currently around $73.50.
If WTI bears maintain control below $73.50, the focus will shift to June's high near $72.70 and the $70.00 level.
In summary, WTI crude oil is expected to maintain a firmer stance, but the path to the upside presents more obstacles compared to the downside. Till we did not advise to sell WTI Crude oil.
Support and Resistance Level: -
S1 73.23 - R1 75.44
S2 72.40 - R2 76.83
S3 71.01 - R3 77.66