WTI pares losses back above $90.00 as Iran nuclear deal advances

• WTI recovered from reaching a daily low of around $86.29 and finished up 0.80%.
• US Department of State noted that a nuclear deal with Iran is closer now, a headwind for oil prices.
• Oil traders are worried about a possible US recession and China’s economic slowdown.

Western Texas Intermediate (WTI), the US crude oil benchmark, recovered some ground on Monday, rallying late after the Wall Street close, up by 2.36%. At the time of writing, WTI is trading at $90.48 per barrel.

WTI’s price action witnessed the black gold hitting a daily low at $86.29 PB, but as the New York session progressed and news that the OPEC+ saying that they will need to tighten output to stabilize the market augmented oil’s appeal. So WTI rallied since the mid-North American session and trades above its opening price.

Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ could cut output against the possibility of a nuclear deal agreement with Iran, which could return the sanctioned country to the oil market.

Meanwhile, discussions between EU members and the US appear to be progressing, as stated by a US Department of State note, saying that a nuclear deal is closer now than It was two weeks ago.

Earlier during the day, oil prices tumbled on worries that China’s demand for oil could diminish, fueled by fears of a possible economic slowdown further cemented by the People’s Bank of China (PBoC) cutting rates from its main lender benchmark rate. Additionally, US recession fears are lingering in traders’ minds, with the US Federal Reserve set to continue tightening monetary policy as they battle to tame inflation towards its 2% goal.

In the meantime, the US Dollar Index is rising 0.78%, sitting at 108.950, its highest level in six weeks, another reason for the US dollar-denominated commodity to extend its losses.

All that said, investors’ focus shifts to Friday’s US Federal Reserve Chair Jerome Powell’s speech, where market participants expect him to reassure that the Fed is committed to tackling inflation, despite ongoing recession fears.

WTI Price Analysis: Technical outlook

From a daily chart perspective, WTI is slightly neutral-to-downward biased, but it could be headed upwards in the near term. Why? Because a falling wedge emerged, and as price action progresses, WTI is about to break upwards, putting into play a test of the 20-day EMA at $91.78, the 200-day EMA at $95.65, and the 50-day EMA at $99.56.