Home Forex WTI grapples with near seven-week high as Chinese holiday dampens oil bulls, PMI tracks

WTI grapples with near seven-week high as Chinese holiday dampens oil bulls, PMI tracks

by SuperiorInvest
  • WTI pulls back from multi-day high amid lack of major positives, cautious sentiment ahead of key data.
  • Sluggish markets and the Lunar New Year in China are curbing energy buyer optimism.
  • Preliminary PMI for January, weekly API crude oil inventory data could drive intraday moves.

WTI crude oil remains on the sidelines around $81.70 after resuming a multi-day high above $82.00 the previous day. Black at that gold depicts market inactivity amid the absence of Chinese players due to the Lunar New Year (LNY) holiday. On the strength of oil price inactivity could be a cautious mood ahead of preliminary data on January activity from key economies.

However, broad-based US dollar weakness and easing recession fears, fueled mainly by China-related optimism, appear to have driven WTI crude to $82.68, the highest level since December 5, 2022.

Strengthening the positive outlook of the energy market could be news indicating a five-month high in India’s oil imports and Pakistan’s readiness to push through energy shortages with international help. It should be noted that hopes of better holiday demand from China have also been driving WTI crude prices recently.

In addition, the energy benchmark also strengthens the price ceiling of the coalition of the European Union and the Group of Seven (G7) on the export of Russian oil.

Alternatively, hawkish comments from major central banks, despite talk of policy normalisation, will join talks of more output from key suppliers to explore WTI oil buyers.

We await the first readings of January activity data for Germany eurozone and the US will be critical for immediate direction. In addition, weekly data on crude oil inventories from industry player American Petroleum Institute (API), 7.615 million ago, will also be important for the immediate direction of the commodity.

Technical analysis

Monday Doji candlestick on the Diary diagram questioning oil buyers unless the bid offers a daily close above the 100-DMA, near $81.75 as of press time.

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