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WTI Crude Oil, Market Update

9/2/2022 12:50 PM

Prices for WTI Crude Oil are being corrected after a three-day "bearish" rally, as a result of which the asset retreated from local highs from the beginning of August and renewed local lows from August 17.

The quotations are under pressure from growing investor fears about a fall in global oil demand amid a decrease in manufacturing activity in Asia, as China, adhering to a "zero tolerance" policy for COVID-19, continues to close million-plus cities for quarantine, which leads to additional barriers to the implementation of chains supplies, as well as the closure of several industrial enterprises.

Another positive factor was data on the dynamics of fuel stocks in US warehouses. According to the Energy Information Administration of the US Department of Energy (EIA) report, the figure fell by 3.326M barrels after falling by 3.282M barrels over the previous period. However, analysts had expected a decrease of only 1.483M barrels.

Last week, during the visit of the Deputy head of the US Treasury Department Adewale Adeyemo to India, negotiations were held on maintaining a price ceiling for Russian oil, and, according to officials, they were constructive. It is noted that the main driver of this decision is the reduction in energy prices for countries experiencing high inflation, as well as the reduction in funding for Russia as the initiator of a special military operation on the territory of Ukraine. The G7 countries are striving to introduce a mechanism to restrict the export of Russian raw materials by December 5, when the sanctions of the "sixth package," initiated by the EU authorities and prohibiting its import from the Russian Federation by sea, come into force. In turn, Russian Deputy Prime Minister Alexander Novak said yesterday that Russia would not sell oil to countries supporting the initiative to set a price ceiling.


On the daily chart, Bollinger bands are moving in a flat: the price range remains almost unchanged but remains quite spacious for the current market activity level. The MACD indicator is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, having reached its lows, reversed into a horizontal plane, indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 90.00, 91.93, 93.97, 96.00. | Support levels: 86.95, 85.00, 83.00, 81.00.




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