WTI remains positive, despite retreating from weekly highs around $90.00

  • November 11, 2022
  • WTI’s trim some of their weekly losses, bolstered by a weak US Dollar.
  • Easing inflation in the United States undermined the US Dollar as traders brace for a less aggressive Fed.
  • China’s refineries asked Saidu Aramco to reduce December’s crude-oil volumes, capping WTI’s recovery.

Western Texas Intermediate (WTI), the US crude oil benchmark, is recovering some ground during the North American session following the United States (US) inflation report that informed prices are easing. Another factor that boosted the appetite for Oil is China’s easing Covid-19 restrictions, underpinned oil prices. At the time of writing, WTI is trading at $88.29 per barrel, gaining 2.37%.

Sentiment remains positive as a cooler-than-expected US Consumer Price Index (CPI) information showed that the US economy is feeling the impact of the Federal Reserve (Fed) monetary policy. The headline inflation came at 7.7% YoY, and the core CPI fell to 6.3% YoY, both below expectations. Following the release, speculations piled up that the Fed might gradually increase the Federal Funds rate (FFR) instead of raising rates on 75 bps ones. The reflection is that odds for a Fed 50 bps rate hike in December jumped from 50% to 85%.

Therefore, the US Dollar (USD) weakened across the board, as the US Dollar Index plunged 3.76% in the week, undermined by US Treasury yields, plummeting almost 30 bps.

Aside from this, Chinese officials announced that quarantines for inbound travelers would be cut by two days to five, a sign cheered by investors.

According to Reuters, several Chinese refiners asked Saudi Aramco to reduce December-loading crude oil volumes, meaning that China’s economy is accounting for a deceleration as it’s struggling to avoid a recession.

WTI Price Analysis: Technical outlook

WTI is neutral-biased, as shown by the daily chart. It should be noted that Friday’s daily high at $90.08 tested a one-month-old downslope trendline drawn from September highs. However, WTI was quickly rejected and retreated above November’s 10 daily high at $87.31. The Relative Strength Index (RSI) in bullish territory suggests Oil prices could increase. However, WTI needs to clear the $90.00 mark, alongside the 100-day Exponential Moving Average (EMA) at $91.07, to turn the bias neutral to upwards.