WTI Price Analysis: WTI rises ahead of central banks decisions

WTI started the week with a 2% increase above $78.00 and the 200-day SMA.
Chinese economic stimulus and global tightening supply underpin Oil prices.
All eyes are now on the main central bank’s decisions after PMI surveys.

On Monday, the West Texas Intermediate (WTI) pierced through the 200-day Simple Moving Average (SMA) and tallied a third consecutive day of gains. Oil prices seem to be gaining traction on a tight global supply and the hopes of a Chinese economic stimulus to bolster the local economy amid recent weakness.

On the negative side, European countries and the UK reported weak Manufacturing and Services PMIs, while the American Indexes came in mixed. Its worth noticing that a global economic downturn may affect the global Oil demand and push down its price.

As for now, markets expect a 25 basis point increase announcement by the Federal Reserve (Fed) on Wednesday but continue to bet on little odds of another hike past July. On the European side, investors have largely priced in a 25 bps hike by the European Central Bank (ECB) on Thursday, but the odds of hikes in September, October and December fell to 55%, 70% and 75%, respectively. Likewise, markets bet on a less aggressive Bank of England (BoE) as the bets of a 50 bps hike on August 3 have fallen to 35% after being largely priced in.

In that sense, dovish bets may be a tailwind for energy prices as more rate hikes tend to cool down economies and lower demand for commodities like Oil. So, the mentioned banks’ policy statements will be closely watched for clues regarding forward guidance.

WTI levels to watch

According to the daily chart, after retaking the 200-day SMA, the technical outlook is bullish for the WTI. In addition, indicators show strong buying momentum, with the Relative Strength Index (RSI) standing in positive territory near overbought levels while the Moving Average Convergence Divergence (MACD) prints rising green bars.

Resistance levels: $79.00,$80.00,$81.00.
Support levels: $76.82 (200-day SMA), $73.50 (100-day SMA), $73.40 (20-day SMA).