- WTI keeps Friday’s pullback from six-week high, dribbles around intraday low of late.
- US criticism of OPEC+ move joins downbeat China data, hawkish Fed bets to probe oil bulls.
- Escalating geopolitical tensions and challenges for rate hikes from the global central banks favor bulls.
- IMF, World Bank meetings could entertain oil traders, US inflation, Fed minutes will be crucial to justify the latest pullback.
WTI crude oil holds lower ground near $91.50 as risk-aversion joins the hawkish Fed bets to propel the US dollar. However, a holiday in the US, Canada and Japan restricts the black gold’s immediate moves during Monday’s Asian session.
Other than the extended weekend in the major markets, downbeat PMI data from China and the criticism of the latest move of the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, also probe the oil buyers.
US Treasury Secretary Janet Yellen said, per the Financial Times (FT), the move by Opec+ to cut oil production was “unhelpful and unwise” for the global economy, particularly emerging markets already struggling with high energy prices.
During the weekend, China’s Caixin Services PMI for September dropped to 49.3 from 55.0 prior. With this, the private activity gauge marked the first contraction since May.
Furthermore, Friday’s strong US jobs report propelled the odds of the 75 basis points (bps) rate hike from the Fed, which in turn weighed on the oil prices. The latest US jobs report for September showed that the headline Nonfarm Payrolls (NFP) rose to 265K versus the 250K expected. Also portraying the strength of the US employment conditions was an unexpected fall in the Unemployment Rate to 3.5% compared to forecasts suggesting no change in the 3.7% prior.
Even so, the recent explosion on the Crimea bridge and the European sanctions on Russia’s oil exports keep the commodity buyers hopeful.
Moving on, this week’s annual meetings of the World Bank (WB) and the International Monetary Fund (IMF) in Washington will be crucial as the global financial leaders will discuss geopolitical tensions and inflation pressure, as well as central bank moves. Also important will be Wednesday’s Federal Open Market Committee (FOMC) Minutes and Thursday’s US Consumer Price Index (CPI).
It should be noted that WTI crude oil prices are near the short-term key resistances amid supply crunch fears and hence any positive news could easily propel the quote.
Technical analysis
100-day EMA and a three-month-old resistance line, respectively around $92.20 and $92.70, challenge the WTI crude oil buyers. That said, the RSI retreat hints at a short-term pullback toward revisiting the $90.00 threshold.