Fundamental analysis of WTI

WTI crude oil price fluctuated around the 79.20 USD level as it rebounded from three-month highs, supporting recent gains driven by a decline in US crude inventories and the aftermath of the Federal Reserve meeting. Data from the U.S. Energy Information Administration showed that U.S. crude oil inventories declined by 600,000 barrels over the past week, below the expected 2.35 million barrel decline.

In addition, the Federal Open Market Committee raised rates by 25 basis points to 5.5%. Higher interest rates typically increase borrowing costs, potentially slowing economic progress and reducing demand for oil. Despite these challenges, the Fed is forecasting the likely avoidance of a recession this year, which could support oil demand if the local economic recovery gains momentum.

 At the same time, the Fed predicts that China's policy response reinforces its ambition to become the world's second-largest oil consumer. Promising economic policy adjustments reported by China's Xinhua news agency reinforce this optimism. These promising developments, combined with a weaker dollar following the Fed's decision, contribute to a favorable atmosphere for oil prices. Supply Scenario The Russian oil production forecast for 2023 is currently under review, with the possibility of a downward revision. In addition, traders are predicting that the supply cuts could last until the end of September, which would support oil prices.

OPEC+ will hold its monthly meeting of the Joint Ministerial Oversight Committee next week. The outcome of that meeting will play a key role in whether Saudi Arabia decides to extend its voluntary 1 million bpd production cut through September. The decision was initially made in July, resulting in a significant drop in production.

According to analysts' forecasts, the price of WTI crude oil may reach the 80 USD mark as a result of the Federal Reserve's policy change and continued demand for oil in a supply deficit environment. However, there is still uncertainty due to global economic factors and geopolitical events. OPEC+ decisions, China's economic recovery and the global balance between supply and demand will play a key role in determining future oil prices. However, a recovery in demand and expected supply cuts could lead to a further decline in global oil inventories, reinforcing the bullish outlook for the commodity.

Technical Analysis and Scenarios:

WTI crude oil is trading at $79.20, consolidating gains and is currently near the upper range of the Bollinger Bands. The upper band is at $80.00, the middle band is at $78.70 and the lower band is at $77.40. The bands have started to converge, which indicates a decrease in volatility and a possible trend change. Currently, the quotes are trading flat, but given the upward trajectory of the indicator, there is a potential for an upward breakout.

Main scenario (BUY)

Recommended entry level: 80.00.

Take Profit: 81.00.

Stop loss: 79.50.

Alternative scenario (SELL)

Recommended entry level: 78.00.

Take Profit: 77.00.

Stop loss: 78.50.