WTI Crude Oil Price: Can WTI Rally Towards $80 as Fed Rate Cuts Loom?
Arslan Butt•Monday, August 26, 2024•2 min read
Oil prices climbed on Monday as escalating violence in the Middle East sparked fears of a broader regional conflict that could disrupt crucial oil supplies.
The ongoing Gaza conflict took a dangerous turn over the weekend, with Hezbollah launching a barrage of rockets and drones into Israel.
In response, Israel’s military struck Lebanon with approximately 100 jets, raising concerns that the conflict could spiral into a wider confrontation involving Iran and the United States.
These developments have put upward pressure on oil prices, with West Texas Intermediate (WTI) crude approaching resistance levels near $77.50.
Fed Rate Cut Signals Boost Global Economic Sentiment
The recent surge in oil prices also gained momentum from signals by the U.S. Federal Reserve indicating imminent interest rate cuts.
On Friday, Fed Chair Jerome Powell hinted at an upcoming easing of monetary policy, which has boosted investor confidence across the commodities market. Both WTI and Brent crude benchmarks rose by more than 2% following Powell’s comments.
ANZ analysts highlighted that “the prospect of easing monetary policy has bolstered sentiment across the commodity complex,” adding that the Fed is likely to introduce a series of progressive rate cuts.
However, it’s worth noting that last week’s oil prices dipped due to concerns over the global economic outlook, which continues to weigh on fuel demand.
WTI Crude Oil Price Forecast
WTI crude is currently testing critical resistance around the $75.49 level, which is marked by a double top formation.
This resistance could limit further gains, but if prices break above this point, WTI may continue its upward trajectory towards the next resistance levels at $76.82, $78.27, and $79.67.
- Resistance Levels: $75.49, $76.82, $78.27, $79.67
- Support Levels: $74.19, $72.79, $71.49
The Relative Strength Index (RSI) is currently at 62, indicating moderate buying strength, while the 50-day Exponential Moving Average (EMA) at $74.51 provides additional support for the uptrend.
Traders should closely watch the $75.49 level; a successful break above it could signal continued bullish momentum, while a failure to do so may lead to a downward correction.
Conclusion: Bullish Outlook Above $75.49
The outlook for WTI crude remains bullish as long as prices stay above the key $75.49 resistance level. However, a break below this level could trigger a sharp sell-off, potentially pushing prices down to the next support zones at $74.19 and $72.79.
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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