WTI crude oil settles above the 200-day moving average for the first time since August | Forexlive

WTI crude oil settled above the 200-day moving average for the first time since August in a rare win for the bulls this year.

The rally above the 200dma improves the technical picture for oil and doesn’t leave much standing in the way to a return to the April high of $83.55. That will be a bigger challenge then the 200-dma, in my opinion. A break above it would indicate that a bottom was reached early in the year, or at least a wider range up to $95.

Fundamentally, more Chinese talk about stimulus is finally making the market believe that something meaningful is coming. The big production cuts from OPEC are also beginning to have the desired effect with the physical market. Goldman Sachs’ Daan Struyven today said:

“We expect pretty sizable deficits in the second half with deficits of almost 2 mmb/d in the 3rd quarter as demand reaches an all-time high, OPEC+ cuts get implemented and US crude supply .. is slowing down meaningfully”

The next market mover for oil will be the weekly inventory data late Tuesday but a dovish turn from global central banks could also help to squeeze out oil shorts that are betting on a recession.