WTI holding firm around $74 despite USD strength

• The Western Texas Intermediate is recovering some ground despite the fact that the dollar continues to rise.
• The Director of the EIA commented that the reopening of China would boost oil prices.
• WTI Technical Analysis: A triple bottom is in sight around $72.50.

The US benchmark crude oil known as Western Texas Intermediate (WTI) Posts minimal gains after falling towards an eight-week low of $72.30 a barrel on Monday, changing hands around $73.96 a barrel, capped by a strong US dollar (USD) across the board.

Wall Street extended its losses on Monday as market participants reassessed a less dovish-than-expected Federal Reserve. Money market futures see a 50 basis point rate hike by US central banks, which would raise the Fed funds target to the 5%-5.25% range. Hence, the dollar continues to prolong its recovery, as shown by the dollar index, which measures the value of the dollar against a basket of six currencies, with a rise of 0.69%, up to 103.703.

Last Friday, WTI fell 3%, following strong US jobs data.

Although the strength of the dollar is a headwind for “black gold”, China’s reopening prospects remain a driver for oil prices, as reported by the Executive Director of the International Energy Agency (IEA), Fatih Birol. Birol commented that producers may reconsider their production policies as China’s Covid-19 easing would increase demand for crude. And he added: “We expect about half of the growth in global oil demand this year to come from China.”

Oil traders should note that the price ceilings for Russian products began on Sunday as the G7 nations the EU and Australia agreed to cap prices for Russian oil-refined products.

WTI Technical Analysis

Technically, WTI remains biased downward as long as the price remains below $82.00 PB. Furthermore, the failure of WTI last Friday to break above the 20-day EMA at $77.65 exacerbated oil’s slide towards year-end lows at $72.30, breaking below the 4th of May low. January at $72.50.

However, since then, oil has bounced and is heading towards the $73.80 area, opening the door for a leg higher. Therefore, the first resistance of the WTI would be at $74.00. A break of the latter would expose the 20-day EMA at $77.64, followed by the psychological level at $78.00, before the 50-day EMA at $78.77. Conversely, WTI would resume the bearish path once it breaks below $72.30.