Western Texas Intermediate (WTI) falls around 2.57% during the New York session, trading at $81.26 at the time of writing. Mixed market sentiment surrounds the financial markets due to Evergrande’s woes once again on the headlines, weaker than expected IBM earnings, and inflationary pressures.
US crude oil benchmark WTI retreated from the 2021 high at $86.00 on the back of an announcement by the National Oceanic and Atmospheric Administration. According to Reuters, the report said that “winter weather in much of the US is expected to be warmer than average.”
Furthermore, in China, coal prices fell 11%, as Beijing signaled that it might intervene to cool the market, which also exerted downward pressure on the black gold.
Despite the fall in oil prices, the Iraq oil minister Ihsan Abdul Jabbar said that crude prices could hit the triple digits for the first time since 2014, in the first six months of 2022. Additionally, Bank of America said that the energy crisis could propel oil prices above $100, according to Bloomberg.
WTI is tilted to the upside, as depicted by the daily moving averages well below the price. However, the Relative Strength Index (RSI) at 64 exiting from overbought levels spurred a violent correction of $3 from the 2021 top.
Wednesday low at $80.77 is the first support, but a daily close below the latter could trigger a correction before resuming the upward trend in crude oil prices. In that outcome, WTI could slide to the October 13 low at $79.40, which is the first demand zone. If that level is broken, would leave the July 6 high at $77.00 as the next place to “buy the dip.”
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