WTI at new weekly highs around $78.40 on improving risk appetite

• WTI posts solid gains of 0.43% on Wednesday.
• Less aggressive comments from Fed Chairman Jerome Powell bolstered oil prices.
• WTI Technical Analysis: Neutral-Bearish, although a rise can reach up to $80.00.

The Western Texas Intermediate (WTI), The US Oil benchmark rises a margin of 0.50% due to a boost in risk appetite in the market, which, worried by a surprising US employment report, expected a dovish tone on Tuesday. risk appetite on the part of the president of the Federal Reserve (Fed), Jerome Powell. However, Powell’s tepid response gave risk-seeking traders a green light. At the time of writing these lines, WTI is trading at $77.93 per barrel.

WTI has rallied after falling towards weekly lows of $72.30 on Monday. Expectations after last Friday’s January nonfarm payrolls report, which added that the US economy added more than 500,000 jobs, put pressure on investors, who scrambled to balance their positions in riskier assets before Jerome Powell’s speech yesterday.

Powell said interest rates would have to rise if strong labor market data threatened to derail the Fed’s efforts to curb inflation. However, he declined to give any guidance on future rate hikes and their magnitude.

That said, investor unease faded as rising interest rates in the United States (US) suggested the dollar could strengthen, meaning oil prices are high for buyers who have other holdings.

The reopening of China following the relaxation of Covid-19 restrictions is expected to support fuel demand. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to keep crude output unchanged, as an Iranian official said the cartel was likely to maintain its current policy on Wednesday.

However, a strong US inventory report limited oil prices, as an increase in supply makes oil cheaper. The US Energy Information Administration (EIA) revealed that US oil production rose to its highest level since April 2020.

WTI Technical Analysis

From a technical point of view, WTI maintains a neutral bias to the downside, and the ongoing correction could offer sellers better entry prices. However, if WTI bulls recapture the 50-day EMA at $78.71, a move towards the $80.00 figure is in play. However, the downtrend is likely to resume when WTI breaks below the 20-day EMA at $77.70. Once broken, oil prices could slide towards a February 7 low of $74.40, before the weekly low of $72.30.