WTI jumps to multi-month high on weak US dollar

WTI crude has surged to daily high above $83.00 ahead of the weekend for the first time since April. The Saudis’ expected reductions in oil output and the depreciation of the US dollar are mostly to blame for the black gold’s upward trend. Additionally, the daily chart shows that the near term forecast for WTI is optimistic.

WTI crude has increased by more than 1.70 percent. The WTI barrel is expected to win for a sixth time in a row, and signs signal overbought circumstances. The US currency weakened following NFP figures revealing a deceleration of job creation in July.

WTI oil is seen as testing new highs as traders stay focused on the production cuts from Saudi Arabia and Russia. In case WTI oil stays above the $81.75 level, it will gain additional upside momentum and move towards the resistance in the $86.00 – $87.30 range.

As traders continued to pay attention to the limited supply, Brent oil tested multi-month highs. The oil markets appear to have received significant assistance from output restrictions. Recently, Brent oil was able to surpass the $86 mark. Brent oil will move towards the barrier in the $88.80-$90.00 region if it trades above $86 on a daily basis.

Mixed data has been released on the US front. According to the Nonfarm Payrolls report from the US Bureau of Labour Statistics, the US economy added 187,000 jobs in July, which was better than the previous month’s total of 185,000 but less than the forecasted 200,000. The unemployment rate was also lower than expected, coming in at 3.5% as opposed to the previous estimate of 3.6%. The average hourly wage, on the other hand, came in at 4.4% YoY, higher than the anticipated 4.2%.

Due to dovish Federal Reserve (Fed) predictions in response to the slowdown in employment growth and investors’ apparent indifference for pay increases, the US dollar declined. A more active monetary policy tends to cool down economies, therefore higher rates tend to be inversely connected with oil prices. As a result, dovish wagers on the Fed and a weaker USD benefit the price of WTI.

The focus now switches to next week’s Consumer Price Index (CPI) readings from the US for July, which are anticipated to have slowed down, as Jerome Powell emphasised that continued decisions depend on data.

After Saudi Arabia’s decision to prolong its voluntary production cut into September helped oil prices soar even further, an OPEC+ ministerial panel that met on Friday did not alter the group’s current oil output policy. If necessary, the body, known as the Joint Ministerial Monitoring Committee, can convene an entire meeting of OPEC and its allies, including Russia, to be known as OPEC+.