WTI is showing a loss in the upside momentum after reaching near $78.50. (Pivot Orderbook analysis)

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• WTI is showing a loss in the upside momentum after reaching near $78.50.
• Solid China recovery is expected to keep the oil price in bullish territory.
• The oil price has ignored fresh hawkish Fed bets as the interest rate hikes won’t be aggressive ahead.

The pair currently trades last at 78.63.

The previous day high was 77.58 while the previous day low was 74.52. The daily 38.2% Fib levels comes at 76.41, expected to provide support. Similarly, the daily 61.8% fib level is at 75.69, expected to provide support.

West Texas Intermediate (WTI), futures on NYMEX, are struggling to extend their upside journey above the immediate resistance of $78.50 in the early Tokyo session. The oil price is expected to continue its upside as investors have ignored the hawkish stance from Federal Reserve (Fed) chair Jerome Powell and his teammates on interest rates.

Investors are anticipating a recession in the United States as the Fed has confirmed more interest rate hikes in its battle against inflation, which has become stubborn in nature. However, the pace of policy tightening by the Fed won’t be aggressive this time as the Consumer Price Index (CPI) is in a declining trend.

Meanwhile, US Treasury Secretary Janet Yellen cited “While inflation remained elevated, there were encouraging signs that supply-demand mismatches were easing in many sectors of the economy,”

On Wednesday, the release of a build-up of oil inventories by the US Energy Information Administration (EIA) failed to pause the upside momentum in the oil price. The EIA reported a build-up in oil stockpiles by 2.42 million barrels for the week ending February 03.

The US Dollar Index (DXY) is aiming to stabilize itself above the critical resistance of 103.00 amid fresh concerns about further interest rate hikes by the Fed.

Meanwhile, rising demand for oil in China after a bleak year amid a recovery in domestic demand and exports is supporting the oil price. This week, International Energy Agency (IEA) Executive Director Fatih Birol on the sidelines of the India Energy Week conference cited “Oil producers may have to reconsider their output policies following a demand recovery in China, the world’s second-largest oil consumer,” as reported by Reuters. He further added, “Half of the growth in global oil demand this year will come from China.”

Meanwhile, an Iranian official delivered an encouraging outlook on oil prices citing that oil prices are going up to about $100/bbl in the second half of 2023.

Technical Levels: Supports and Resistances

XTIUSD currently trading at 78.63 at the time of writing. Pair opened at 77.47 and is trading with a change of 1.5 % .

The pair is trading below its 20 Daily moving average @ 78.9, above its 50 Daily moving average @ 77.58 , below its 100 Daily moving average @ 80.95 and below its 200 Daily moving average @ 90.5

The previous day high was 77.58 while the previous day low was 74.52. The daily 38.2% Fib levels comes at 76.41, expected to provide support. Similarly, the daily 61.8% fib level is at 75.69, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 75.47, 73.47, 72.41
• Pivot resistance is noted at 78.53, 79.58, 81.58

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