WTI (NYMEX futures) is reversing a sell-off from the $101 level, as bears take a breather before the next push lower.
A combination of bearish factors continues to keep the downside exposed in WTI, despite the latest rebound. Increasing odds of an incoming global recession undermine the sentiment around the black gold. The euro area preliminary Business PMIs disappointed and revived recession fears.
Meanwhile, a big build in the US stockpiles combined with US President Joe Biden’s gasoline tax holiday add to the weight on the price of oil. The American Petroleum Institute (API) reported a build this week for crude oil of 5.607 million barrels. It is the biggest inventory rise of over 5 million barrels since mid-February.
On Wednesday, Biden urged Congress to pass a three-month suspension of the federal gasoline tax to help combat record pump prices. All eyes now remain on the US PMIs and sentiment on Wall Street for fresh trading opportunities in WTI.
It’s worth noting that the US Energy Information Administration said its weekly crude stocks change data, due for release on Thursday, will be delayed due to systems issues until at least next week.
From a short-term technical perspective, WTI is likely to challenge the bullish 100-Daily Moving Average (DMA) at 104.37, which was the critical support a day before.
Acceptance above the latter will unleash the additional recovery towards 105, above which doors will open up towards the horizontal 50 DMA at 109.09.
The 14-day Relative Strength Index (RSI) is sitting just above the oversold region, suggesting that any recovery could be a good selling opportunity.
The immediate downside target is seen at Wednesday’s low of 101.17, below which a fresh downswing will kick in towards the 100 mark.
Further south, the My 11 low of 97.21 will be on the sellers’ radars.
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