WTI bulls stay determined despite pullback towards $79.00
- WTI grinds higher around seven-year top, prints three-day uptrend.
- Tropical storm Pamela renews supply concerns amid fears of hitting portion of Mexico coast by mid-week.
- Risk-off mood questions bulls despite concerns over Fed tapering, demand-supply matrix.
- US holiday, quiet calendar will restrict short-term moves.
WTI pares intraday gains while easing to $79.20 during Monday’s Asian session. Even so, the quote remains firm for the third consecutive day while teasing the highest levels since October 2014 amid mixed clues.
Fears of tropical storm Pamela to hit the Mexican coast by mid-week could be cited as a major catalyst for the oil buyers’ recent optimism. On the same line could be the last week’s OPEC+ verdict that defied any more increase in the output than previously agreed 400,000 barrels daily in November.
Furthermore, the recent weakness in the US Nonfarm Payrolls (NFP), much lower than around 500K expected to 194K, raised concerns over the Fed’s tapering plans even as the US Unemployment Rate dropped and Average Hourly Earnings improved in September.
Alternatively, US-China trade tussles are back in focus with the latest talks highlighting a difference among the world’s top two economies. While the US sought clearance for the previous issues relating to China’s trade and subsidy practices, Beijing eyed for the cancellation of tariffs.
The world’s top two economies also jostled over Taiwan recently while the last week’s downbeat Baker Hughes Rig Count, 433 versus 428 prior, also challenge WTI bulls.
It’s worth noting that the risk-off mood, as portrayed by -0.30% print of the S&P 500 Futures also weighs on the oil prices.
Moving on, a partial holiday in the US and a full one in Canada may restrict immediate WTI bulls.
Technical analysis
Unless breaking an ascending support line from August 23, near $76.00 by the press time, WTI remains on the way to late 2012 lows near $84.00.