WTI crude soars above $80 as Hurricane Idalia and weak USD stir the pot

• Hurricane Idalia set to hit Florida, causing WTI crude to jump 1.5%, trading at $81.28 after a daily low of $79.39.
• US Dollar Index (DXY) falls below 104.000, weakened by poor jobs data and declining consumer confidence, providing a tailwind for oil prices.
• American Petroleum Institute reports a significant 11.5 million barrel drop in US crude inventories, far exceeding estimates of a 3.3 million barrel decline.

Western Texas Intermediate (WTI), the US crude oil benchmark, registers gains of more than1.50%, as hurricane Idalia is set to hit Florida this week. That, alongside a frail US Dollar (USD), was a tailwind for oil prices, which jumped above $80.00 a barrel on Tuesday. WTI is trading at $81.28 after hitting a daily low of $79.39.

Oil prices rally amid looming Florida hurricane and dismal US economic data

Worse than expected economic data in the jobs market weakened the greenback, which fell below the 104.000 mark, as shown by the US Dollar Index (DXY). The DXY, which measures a basket of six currencies against a basket of peers, registers losses of 0.56%, down at 103.477, as of writing.

The US JOLTs report for July showed that job openings tumbled below estimates and the previous month’s reading, suggesting the labor market is cooling and it might help the US Federal Reserve (Fed) to curb high inflation without further increases in the Federal Funds Rate (FFR). That, alongside decaying consumer confidence announced by the Conference Board (CB), pressured the US Dollar.

In the meantime, Hurricane Idalia was forecast to reach level 3 with winds of at least 111 mph (179 kph) before touching ground in the early hours of Wednesday. According to Reuters, Idalia would likely impact fuel distribution systems and hit fuel consumption just ahead of the Labor Day holiday on September 4.

Even though is not expected to hit oil platforms, some major companies evacuated staff. Data from the American Petroleum Institute (API) showed US crude oil inventories fell by 11.5 million barrels in the week of August 25, well above estimates of 3.3 million.

WTI Price Analysis: Technical outlook

From a technical perspective, WTI remains upward biased after a golden cross formed on August 22, suggesting that oil prices are set to advance. Crude oil is trading at six-day highs, with buyers eyeing $82.00 as the next resistance, followed by the August 21 daily high at $82.13 before challenging the year-to-date (YTD) high of $84.85. Conversely, WTI’s first support is $80.00, followed by $77.64, the August 24 daily low.