Tighter global supply pushes WTI to highs since April

On Thursday, WTI jumped above $80.00 for the first time since the middle of April. The increase in oil prices is supported by tighter global supply and Chinese stimulus.

The price of American crude oil increased by more than 1% to over $80.00, which is the highest level since mid-April. It is now trading for $79.99 at the time of writing.

Investors seem to be weighing the fact that the Chinese economic stimulus would bolster local economic activity and drive Oil prices up on higher demand. In addition, expectations of OPEC production cuts give further traction to the black gold.

On the negative side, the USD strength following the Fed’s hike decision on Wednesday and the release of robust economic activity data on Thursday may limit the WTI’s advance.

In that sense, as Jerome Powell opened a hike in September as the decision will be based on data, strong US data fuel hawkish bets on the Fed favouring the USD.

It was reported that the Q2 Gross Domestic Product (GDP) increased at an annualized rate of 2.4%, exceeding the 1.8% expected and the previous 2%. Durable goods saw a notable increase in June. The headline number increased by 4.7% MoM, exceeding the market expectation of 1%, while orders excluding Defense and Transportation increased by 6.2% and 0.6%, respectively, despite expectations for them to remain unchanged.

Additionally, jobless claims fell further for the week ending on July 21, coming in at 221,000 as opposed to the anticipated 235,000 and the prior 228,000. Low prospects of an increase in September are being discounted by the markets (24%).

Technically speaking, the WTI has a short-term optimistic outlook based on the daily chart. The possibility of a negative correction shouldn’t be ruled out as long as the price is still trading above its key moving averages and the indicators are trending higher but still close to overbought conditions.