FX

WTI pokes multi-month top near $84.00 despite sluggish sentiment

  • WTI picks up bids towards the fresh high since October 2014, flashed the previous day.
  • Market sentiment dwindles amid mixed headlines concerning China, Evergrande.
  • US dollar weakness keeps oil buyers hopeful, second-tier data eyed.

WTI remains firmer around $83.85, up 0.15% intraday during Monday’s Asian session. The energy benchmark refreshed the seven-year high the previous day amid softer US dollar and hopes of further energy demand. However, the recently mixed concerns probe the oil buyers of late.

US Dollar Index (DXY) dropped on Friday, marking the seventh daily fall in the last eight amid firmer mood and a pullback in the US 10-year Treasury yields from the five-month top. The same helped oil buyers to renew the highest levels since October 2014.

Also favoring the black gold were headlines concerning China’s struggling real-estate firm Evergrande. Following the firm’s ability to pay $83.5 million in interest on a U.S. dollar bond, the property company announced it have restarted 10 projects in six cities including Shenzhen.

On the contrary, the recent covid conditions in China and Russia have been grim and challenge the risk-on mood, as well as the commodities. As per the latest comments from Mi Feng, a spokesman at the National Health Commission, shared by Reuters, ”There is increasing risk that the outbreak might spread further, helped by ‘seasonal factors’”. On the same line, another real estate firm from China, namely Modern Land, is said to struggle to pay $250 million 12.85% senior notes due October 25. Additionally, Fed’s tapering and firmer US Treasury yields also challenge the oil buls.

It should be observed, however, that chatters over energy supply outage and OPEC+ support an only gradual increase in output versus the push for more add to the WTI’s strength.

While portraying the mood, the S&P 500 Futures print -0.15% intraday loss while the US Dollar Index (DXY) remains pressured at the latest, favoring commodity buyers.

Given the mixed catalysts and a light calendar in Asia, qualitative factors may gain major attention for fresh clues before ahead of the US Chicago Fed National Activity Index for September and Dallas Fed Manufacturing Business Index for October, up for publishing today.

Technical analysis

A two-month-old support line, near $79.80 by the press time, keeps WTI bulls directed towards November 2012 lows near $84.10. However, overbought RSI conditions and an ascending resistance line from March will challenge the oil buyers around $84.50 afterward.

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