WTI justifies Thursday’s bearish Doji, ignores China PMI to ease around $76.00

• WTI bounces off intraday low but remains mildly offered on a day.
• China’s official PMIs came in better-than-expected in December.
• Omicron woes challenge bulls, geopolitical put a floor to downside.
• Year-end liquidity crunch, off in multiple markets to restrict intraday move.

WTI defends $76.00 during a corrective pullback from intraday low amid Friday’s sluggish Asian session. Even so, the energy benchmark portrays mild losses while justifying the technical details and paying a little heed to China PMI, as well as a few geopolitical catalysts.

China’s NBS Manufacturing Purchasing Managers' Index (PMI) grew past the 50.1 forecast and prior release to 50.3 in December. The Non-Manufacturing PMI rose to 52.7 versus 52.3 previous readouts but eased below 53.1 market consensus during the stated month.

Iran’s space launch derails previous optimism concerning the denuclearization deal and keeps the geopolitical fears over the key oil supplier on the table. Additionally, China and Hong Kong conveyed their dislike for the US push to release Hong Kong-based journalists, which in turn suggest the escalation of tension between the world’s top economies, indirectly signaling firmer oil prices amid supply fears.

It should be noted, however, that Saudi Arabia recently supported continuation to the OPEC+ plan and hints at further supply crunch amid a latest increase in output.

On a different page, the record high coronavirus cases challenge energy prices but the global policymakers’ cautious optimism, backed by scientific studies, favor the oil bulls. Additionally, the US policymakers remain hopeful of reaching an agreement over the Build Back Better (BBB) plan while also trying to placate fears over the Omicron and keeping the energy bulls positive.

Talking about the data, the US Initial Jobless Claims eased to 198K versus 208K expected during the week ended on December 24. Further, Chicago Purchasing Managers’ Index rose past 62.0 forecast to 63.1 for December.

Against this backdrop, the Wall Street benchmarks posted mild losses whereas the S&P 500 Futures decline 0.35% at the latest.

Moving on, a light calendar and off in multiple Asia-Pacific markets, as well as year-end holiday mood at the rest, could restrict short-term oil moves.

Technical analysis

A bearish candlestick formation near the monthly top joins failures to cross a three-week-old resistance line to keep WTI sellers hopeful.

However, 50-DMA and 100-DMA levels, respectively around $75.55 and $74.20, restrict short-term declines of the black gold. Also acting as a downside filter is the early December’s swing high near $73.20.

Meanwhile, an upside clearance of the stated resistance line of $77.70 will defy the bearish signals and track the upbeat MACD to direct oil bulls towards late November’s top near $79.00 and then to the 80.00 threshold.

WTI: Daily chart

Trend: Further weakness expected