An upward trend sets the stage for the WTI Crude Oil Futures (NYMEX: CL) to retest a 9-month high. The surge in oil prices was supported by supply cuts from Saudi Arabia and Russia, but a strong Greenback is beginning to weigh in on the Future’s gains. The US PPI MoM increased from 0% in June to 0.3% in July, which may make oil more expensive and thereby threaten the growing demand.
However, OPEC+ have stated that they will do whatever it takes to boost the commodity as the members aim to shrink inventory levels throughout the course of this year in order to bolster demand and stabilise prices. Meanwhile, the Russia-Ukraine war continues to stir up tensions, and a weak economic environment in China creates headwinds for a rise in demand. Will the WTI Futures be able to keep their gains, or will they begin to falter?
The WTI Crude Oil Futures are trading within an ascending channel pattern on the 4H Chart due to tightening supply from OPEC+. A leg down placed the Futures in line with the 50-day moving average, which is just out of reach of the lower boundary of the channel. If the price action dips below the 50-day moving average, a move out of the lower boundary of the channel may mark a point of interest for reversing the upward trend. In this case, the $80.68 per barrel (BLL) support at the 23.60% Fibonacci level may pave the way for further downside momentum.
However, the WTI Crude Oil Futures may be propelled by rising demand which could see the lower boundary of the channel hold before boosting the price action towards the $84.88/BLL resistance. If a breakout from this resistance is sustained, the $87.47/BLL major resistance may be the next point of interest in furthering an upward trend.
The WTI Crude Oil Futures are trading within an ascending channel pattern due to rising demand placing the $87.47/BLL major resistance within reach. However, supply constraints could begin to weigh in on the Futures with a leg down towards the $80.68/BLL support marking a possible point of interest for downside momentum.
Sources: TradingView Trading Economics, IEA, Reuters
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