WTI is on the approach to the psychological $70 level

  • US oil is on the front foot due to demand-side positive implications and looking towards a test of $70.00.
  • Prices are rising as risk sentiment improves and as the US dollar slides.
  • Bulls could well engage at a discount in the $68.50s in a correction from current resistance.

US West Texas Intermediate (WTI) has been firm in the US sessions, moving into positive territory on the charts through the prior day’s highs.

On a spot basis, the price has rallied from a low of $66.69 to a high of $69.42 and is currently 1.13% higher on the day so fra at $69.25

A combination of US political news at the start of the week has helped to lift the price of oil that has otherwise been weighed down by the negative implications for global demand due to the spread of the delta variant.

Firstly, the US Senate has passed the Infrastructure Investment and Jobs Act bill which calls for $550 billion in new public-works spending above what already was expected in future federal investments.

This will be including $110 billion for roads, bridges and other projects, as well as $66 billion for rail, $65 billion for broadband internet and $55 billion for water systems.

Besides the sheer demand for oil due to the nature of the work to be done, a general risk-on theme on the back of the news lifted the commodity complex.

The commodities were given a sending wind on Wednesday due to the slide in the greenback following a miss in US Consumer Price Index data. 

The consumer price index increased 0.5% last month after climbing 0.9% in June, the Labor Department said.

In the 12 months through July, the CPI advanced 5.4%. Excluding the volatile food and energy components, the CPI rose 0.3% after increasing 0.9% in June.

Economists polled by Reuters had forecast overall CPI would rise 0.5% and core CPI 0.4%.

The dollar index DXY, which measures the greenback against a basket of other major currencies, was down 0.22% at 92.865 and near to the lows of 92.801 in mid-day trade. 

Earlier, it hit 93.195, the highest since April 1, and not far off of its 2021 high of 93.439.

Meanwhile, in other favourable industry-related news from the White House, the Biden administration said it would not call on US producers to increase crude output, and that efforts to increase OPEC production were a longer-range plan.

Additionally, a government report showed that US crude supplies fell last week.

EIA data showed crude oil stockpiles fell last week, while gasoline inventories dipped to their lowest level since November.

The data is consistent with prior data that has shown that crude inventories have been on the decline for several weeks due to increased demand. 

WTI technical analysis

As illustrated, the price has breached above the prior day’s high following a series of strongly bullish daily candles and price action.

This gives rise to the prospects of a continuation to test higher resistance of the $70 area. 

Hourly chart


From an hourly perspective, the trend is well defined as it moves into another area of resistance which will likely result in a meanwhile apex of the bullish trend. 

A correction back into support would now be expected.

However, so long as the 68 figure holds, there will be a high probability that the bulls will pile in again for a test of the 70 psychological figure. 

In the meantime, there could be a drift back to the 38.2% Fibonacci retracement of the latest bullish hourly impulse.

This is located near the prior highs that would be expected to now act as the first new support structure around 68.50. 

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