WTI Price Analysis: Oil prices decline after EIA data, resilient USD

• WTI decreased by more than 0.80%, below $87.00.
• Global tighter supply amid further extensions of voluntary cuts on OPEC+ countries limits the downside for WTI.
• US Crude Oil stockpiles decreased in the first week of September, above expectations.

In Thursday's session, the West Texas Intermediate (WTI) retreated below $87.00, near $86.30, after releasing the Energy Information Administration (EIA) stock data. On the USD side, despite falling yields, it stays resilient and contributed to the WTI’s decline.

On the data front, the Energy Information Administration (EIA) reported that Crude Oil stocks decreased by 6.37M in the first week of September, higher than the expected 2.06M, but failed to trigger a reaction on the WTI. Furthermore, as Oil contracts are denominated in USD, a stronger Greenaback limits the upside potential in the session, and the expectations of one last hike of the Federal Reserve (Fed) give the Greenback traction. On Thursday's session, it was reported that the number of people filling for unemployment benefits increased but was lower than expected, suggesting that the labour market remains resilient. 

As for now, the odds of a hike in November or December by the Fed, according to the CME FedWatch tool, increased to 40%. High rates tend to cool down the economies, so solid economic figures may allow the Fed to continue hiking, limiting the WTI’s potential in the short term.

On a positive note, Saudi Arabia, the biggest Oil exporter in the world, is set to extend its voluntary production cuts throughout the rest of 2023 by 1.66 million barrels per day (bpd) after announcing a 1 million reduction in July. In that sense, supply forces may limit the downside for the WTI.

WTI Levels to watch 

 Analyzing the daily chart, the WTI's technical outlook is bullish in the short term, but indicators still flash overbought signals meaning that the price may correct in the next sessions. The Relative Strength Index (RSI) is above 70 with a negative slope, while the Moving Average Convergence Divergence (MACD) displays stagnant green bars. In the larger context, the pair is above the 20,100,200-day Simple Moving Average (SMA), suggesting that the bulls are firmly in control..

 Support levels: $86.00, $85.50, $84.00 

 Resistance levels: $87.00, $87.50, $88.00

WTI Daily Chart