WTI renews 11-week top around $74.50 amid cautious optimism
- WTI picks up bids during five-day uptrend, refreshes multi-day high.
- Hopes of US stimulus, economic recovery underpin oil demand, geopolitical challenges test supplies.
- OPEC+, energy reserve offload and Evergrande fears fail to tame the bulls.
- US Durable Goods Orders, risk catalysts should be observed for fresh impulse.
WTI extends a five-week uptrend to refresh multi-day high with a $74.52 mark during Monday’s Asian session. In doing so, the black gold cheers mildly positive market sentiment while paying a little heed to the US dollar strength and challenges to risk appetite from China.
Optimism surrounding US stimulus and debt limit seems to have recently favored oil buyers. Although US Republicans challenge Democratic demand of $3.5 trillion stimulus, as well as pushing the debt limit further to the north, House Speaker Nancy Pelosi sounds optimistic of late. However, she did say to the ABC News during the weekend, per Reuters, “I'm never bringing a bill to the floor that doesn't have the votes.” Also, concerns over the actual size of the stimulus, recently trimmed with a $1 trillion infrastructure bill, add to the market’s confusion. Even so, the aid package is likely to be rolled out soon as the US government inches closer to the October 01 budget expiry.
Elsewhere, hurricanes and typhoons have already damaged Gulf output and hence some among the key oil producers are planning to shift their production houses to either Canada or Iraq. The same joins tensions between the West and the Middle East to flag the geopolitical fears and test the supplies.
Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) noted in its monthly report that it forecasts the world oil demand to exceed pre-pandemic levels and average 100.8 million barrels per day (bpd), as reported by Reuters on September 13.
On the contrary are the looming fears over the default of China’s real estate biggie Evergrande and the chatters over Eurozone economic uncertainty due to German election polls to challenge the demand concerns. Also on the negative side is the US dollar strength amid the Fed tapering concerns. That said, the US Dollar Index (DXY) remains firmer around the yearly peak marked in August.
It’s worth noting that the US equities and stock futures remain firmer of late and add strength to the oil prices upside.
Looking forward, US Durable Goods Orders for August, expected +0.6% versus -0.1% prior, may entertain oil traders but the risk catalysts will be the key to follow for fresh impulse.
Technical analysis
With a clear upside break of the late July tops surrounding $73.90, WTI is ready to challenge $75.00 and $75.70 intermediate halts during the run-up to the yearly peak of $76.40.