WTI back over $83 amid further volatility

Tuesday sees a tug in both directions for crude oil. Recent rate cut hopes are sparked by the US PMIs. Equities that are associated with risk are boosted as markets welcome the slowing US economy that could mean looming interest rate cuts. Tuesday’s start for West Texas Intermediate crude oil was weak, with prices dropping below $81.00 per barrel. However, a general market rebound in risk appetite propelled barrel bids to new highs above $83.00.

Rekindled hopes that the US Federal Reserve (Fed) would have to start reducing rates sooner rather than later were aroused by US Purchasing Managers Index (PMI) data that came in far lower than anticipated.
Since Iran declared it will not pursue additional reprisal against Israel, current geopolitical tensions have decreased, but crude oil markets are still vulnerable to negative movements. Amid persistent concerns that a confrontation in the Middle East could escalate into full-scale warfare, WTI’s recent surge petered out at $87.00 per barrel as more rational thinking took hold.

Financial markets are expected to be driven by US data for the remainder of the trading week. On Thursday, investors will be watching for the US Gross Domestic Product (GDP) data, which are expected to show a little decline to 2.5% from 3.4% in the previous quarter. The US Personal Consumption Expenditure Price Index (PCE) inflation data, which is expected to remain stable at 0.3% MoM, is scheduled for release on Friday.

Technically speaking, WTI crossed $83.00 per barrel after rising from the lowest bids on Tuesday, which were slightly below $81.00. US Crude Oil prices rose late in the day, closing barely above the 200-hour Exponential Moving Average (EMA).

US Crude Oil is still losing ground on its recent gains, even with Tuesday’s late recovery. WTI is down about 4.5 percent from its swing highs in April, which were close to $87.00 per barrel. Long-term technical support is located at the 200-day EMA and is holding close to $79.23 on the downside.