The WTI Futures (NYMEX: CL) ticked up due to the potential for economic stimulus measures by the Chinese government to support weak economic data. Additionally, lower-than-expected inflation in the US has enacted hope that the Federal Reserve’s anticipated rate hike in July would be the last of its current tightening cycle, thereby bolstering crude oil prices.
Furthermore, the prospect for further supply cuts by key oil producers Saudi Arabia and Russia have had a positive impact on market sentiment as demand and supply factors begin to find common ground. In early July, Saudi Arabia decided to extend a voluntary output cut of 1 million barrels per day (bpd) into August, while Moscow announced a reduction of exports by 500,000 bpd for the same period.
Technical
The WTI Futures extended their gains, establishing major resistance at $77.23 per barrel (BLL), but a slight pullback took the crude oil futures within reach of the 38.20% Fibonacci retracement. A failed breakdown attempt of the $74.01 BLL support encouraged upward momentum, establishing resistance at $76.74 BLL, which may be a point of interest in reigniting an upward trend.
If a breakout beyond the $76.74 BLL resistance is sustained, the $77.23 BLL major resistance may come into play. However, the $76.74 BLL resistance could be rejected, which may encourage downside momentum towards the $74.01 BLL support. Where this support fails to hold, a breakdown of the 38.20% Fibonacci retracement may mark a pivot point towards further downside opportunities.
Summary
The WTI Futures ticked higher due to the prospect of economic stimulus from China and further supply cuts from major oil producers. If the upward momentum is sustained, a breakout from the $76.74 BLL resistance may pave the way towards the $77.23 BLL major resistance. However, the $76.74 BLL resistance could hold, which may promote a pullback towards the $74.01 BLL support.
Sources: TradingView, Reuters
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