WTI hits a six-month low at around $85.74 on speculations of Iran’s nuclear deal, recession fears

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WTI hits a six-month low at around $85.74 on speculations of Iran’s nuclear deal, recession fears

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• Western Texas Intermediate (WTI) drops almost 1%, extending its losing streak to three days.
• Mixed US data and weaker Industrial Production and Retail Sales from China keep producers uncertain of total oil requirements.
• The Iran nuclear deal agreement would free additional crude to the global market, a sign of lower energy prices.

The pair currently trades last at 87.15.

The previous day high was 91.54 while the previous day low was 86.34. The daily 38.2% Fib levels comes at 88.33, expected to provide resistance. Similarly, the daily 61.8% fib level is at 89.56, expected to provide resistance.

US crude oil benchmark, known as WTI, drops to six-month lows on recession fears, alongside mounting speculation of an Iran deal, which would free more than 700K barrels per day to the battered oil market. In the meantime, Wester Texas Intermediate (WTI) exchanges hands at $87.15 PB, slightly down 0.80%.

Investors’ mood remains upbeat, with US equities posting recoveries, despite an ongoing deceleration in the US economy. Albeit US Industrial Production exceeded estimations to the upside, underpinned by motor vehicles and higher manufacturing output, US Building Permits and Housing Starts for August plunged into contractionary territory, courtesy of higher interest rate increases by the Federal Reserve.

Worth noting that the Atlanta Fed GDPNow for the third quarter (Q3) dropped from 2.5% to 1.8%, though slightly better than the Q2 advanced reading.

The factors abovementioned weighed in oil prices, with WTI further tumbling below the 200-DMA at $95.51. Additionally, Monday’s data from China revealed that Retail Sales and Industrial Production missed expectations, increasing uncertainty about oil’s demand.

Elsewhere, talks between Iran and the EU regarding the nuclear accord seem to be progressing. Sources cited by Bloomberg commented that the “potential for a deal is being priced in.” That said, volatility around the oil market should increase until a final announcement is made.

If Iran’s nuclear deal is approved, oil from Teheran would be seen as a relief to high energy prices, particularly consumers, which had been dealing with skyrocketing petrol and gasoline prices, with countries like the US battling inflation at 4-decade highs.

Technical Levels: Supports and Resistances

XTIUSD currently trading at 87.15 at the time of writing. Pair opened at 87.37 and is trading with a change of -0.72 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 93.44, 50 SMA 101.35, 100 SMA @ 103.54 and 200 SMA @ 94.49.

The previous day high was 91.54 while the previous day low was 86.34. The daily 38.2% Fib levels comes at 88.33, expected to provide resistance. Similarly, the daily 61.8% fib level is at 89.56, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 85.29, 83.21, 80.08
• Pivot resistance is noted at 90.5, 93.62, 95.7

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