WTI crude oil prices snap three-day downtrend at the lowest levels in 12 days, Pivot Orderbook analysis

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• WTI crude oil prices snap three-day downtrend at the lowest levels in 12 days.
• Hopes of OPEC+ output cut contrast with the US-Iran oil deal but softer USD, yields favor buyers of late.
• China’s covid conditions, US NFP also become important for fresh impulse.

The pair currently trades last at 87.5.

The previous day high was 89.36 while the previous day low was 85.77. The daily 38.2% Fib levels comes at 87.14, expected to provide support. Similarly, the daily 61.8% fib level is at 87.99, expected to provide resistance.

WTI crude oil prices consolidate weekly losses around a fortnight low, picking up bids to $87.35 during Friday’s Asian session. In doing so, the energy benchmark cheers the expectations of output cut from the major producers while also trying to ignore the talks surrounding the US-Iran oil deal. Above all, the market’s consolidation ahead of the US employment report appears to favor the latest corrective bounce of the commodity.

“The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are due to meet on September 5 against a backdrop of sliding prices and falling demand, even as top producer Saudi Arabia says supply remains tight,” per Reuters. The news also mentioned that OPEC+ this week slashed its demand outlook, now forecasting demand to lag supply by 400,000 barrels per day (bpd) in 2022, but it expects a market deficit of 300,000 bpd in its base case for 2023.

On a different page, Reuters quotes Iranian state news while saying that Iran has sent ‘constructive’ response to US proposals aimed at reviving 2015 nuclear deal, adding that response ‘aimed at finalizing negotiations’.

It should be noted that a covid-led lockdown in China’s Chengdu city joins downbeat Manufacturing PMIs and hawkish Fedbets to exert downside pressure on the WTI crude oil prices of late.

That said, the US 10-year Treasury yields print a one-pip fall from the highest levels since late June, to 3.25%, while the two-year US bond coupons follow the trend while retreating from the 15-year high. That said, the CME’s FedWatch Tool signals a 74% chance of the Fed’s 75 basis points of a rate hike in September versus nearly 69% previously.

Looking forward, oil traders will pay close attention to the US Nonfarm Payrolls (NFP) and Unemployment Rate for August, expected 300K and 3.5% versus 528K and 3.5% respective priors, for fresh impulse.

Although the $85.30-50 horizontal support restricts the immediate downside of the black gold, recovery remains elusive until crossing the convergence of the 50-DMA and the 200-DMA, around $95.15-30.

Technical Levels: Supports and Resistances

XTIUSD currently trading at 87.5 at the time of writing. Pair opened at 86.14 and is trading with a change of 1.58% % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 90.71, 50 SMA 95.52, 100 SMA @ 102.3 and 200 SMA @ 95.25.

The previous day high was 89.36 while the previous day low was 85.77. The daily 38.2% Fib levels comes at 87.14, expected to provide support. Similarly, the daily 61.8% fib level is at 87.99, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 84.83, 83.51, 81.24
• Pivot resistance is noted at 88.41, 90.67, 91.99

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