In a mesmerizing twist of events, the WTI futures (NYMEX: CL) is ablaze with expectation as the market’s gaze locks firmly onto supply dynamics, all while balancing on the tightrope of demand uncertainty. The passing of the US debt limit agreement ignited optimism, triggering black gold’s upward ascent. With the Non-Farm Payroll (NFP) nearing, can the bulls sustain their momentum?
The market has been sending mixed demand signals, with the Caixin Manufacturing PMI unexpectedly rising at 50.9. At the same time, the EIA reported a 4.488M barrel increase in crude oil inventories, exceeding the expectation of a 1.386M barrel contraction. With the contradicting data, the futures have been riding the risk-on wave, while caution remains ahead of Friday’s NFP report, along with the weekend’s OPEC + meeting. After this weekend, the market will have a clearer idea of the status of the oil supply, which could enlighten the uncertain cloud in the current demand-supply dynamics.
Technical
A descending triangle has formed on the 1D chart, where the bulls found support to push through the daily pivot support at $69.56 per barrel (BLL). Resistance at $71.61/BLL presents a barrier to the additional upside as the week draws to a close.
A soft NFP report could entice the bulls to rise above the triangle resistance toward $73.77/BLL. If the OPEC+ meeting reveals additional supply cuts, the possibility is there for further upside toward $76.17/BLL and $78.14/BLL.
However, if the NFP report dents the market’s sentiment, the triangle resistance could hold, bringing the pivot point at $69.56/BLL back into play. From there, support at $68.05/BLL stands in the way of the bears breaking down the triangle at $66.80/BLL toward $65.42/BLL.
Summary
The WTI futures are enjoying upside momentum on improved risk sentiment. With the upcoming NFP report and OPEC+ meeting, the demand-supply dynamics could straighten out heading into the new week. If the NFP report dents sentiment without any production cuts from OPEC+, the futures could look to break down the descending triangle at $66.80/BLL. Alternatively, the bulls could look toward resistance at $73.77/BLL.
Sources: Koyfin, Tradingview
