WTI crude oil has rebounded to around $68.00, though gains may be limited due to the strength of the U.S. dollar.
Market Update:
WTI crude oil has slightly recovered, reaching around $68.00 during early Thursday’s Asian trading session. However, this upward momentum could face challenges due to a stronger U.S. dollar.
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Fundamental Insights:
- West Texas Intermediate (WTI), the benchmark for U.S. crude, climbed to $67.90 early Thursday, buoyed by a marginal drop in U.S. crude inventories.
- The American Petroleum Institute (API) reported a 777,000-barrel decline in crude stockpiles last week, contrasting sharply with the 3.132 million-barrel build recorded the prior week. Market projections had anticipated an increase of 1 million barrels.
Despite this supportive inventory data, the upward trajectory for WTI might be tempered by the ongoing strength of the U.S. dollar. Recent Consumer Price Index (CPI) figures for October aligned with expectations, bolstering the greenback to its highest point since November 2023. This increase makes oil more costly for global buyers and could weigh on demand.
Looking ahead, market participants are eagerly awaiting key data releases, including the U.S. Energy Information Administration’s (EIA) crude oil stockpile report, U.S. Producer Price Index (PPI), and Initial Jobless Claims. Comments from Federal Reserve officials will also play a pivotal role in shaping market sentiment.
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Daily Technical Analysis of WTI Crude Oil:
WTI crude oil is currently navigating a downtrend within a descending price channel. Here’s a snapshot of the key technical indicators:
- Moving Averages: Prices are trading below all significant Simple Moving Averages (SMAs).
- Relative Strength Index (RSI): Positioned in the selling zone, signaling bearish sentiment.
- Stochastic Oscillator: Indicates a neutral trend, reflecting indecisiveness among traders.
- Immediate Resistance: $69.06
- Immediate Support: $67.66
Trading Strategy: How to Approach Crude Oil Today
Crude oil initially showed strength but faced resistance, leading to a sharp price pullback. After briefly bouncing off support levels, prices attempted to recover but failed to sustain momentum. Currently, crude oil is holding just above its support zone and inching toward a resistance level. If prices get rejected at this resistance, a renewed downward move could ensue.
Suggested Trade Setup:
- Action: Limit Sell at $69.61
- Take Profit: $66.94
- Stop Loss: $71.64