WTI surges before policy decisions by key central banks

WTI increased by 2% to begin the week over $78.00 and the 200-day SMA. Oil prices are supported by global supply constraints and Chinese economic stimulus. Following PMI surveys, all eyes are on the main central bank’s choices. The American crude is trading at $78.929 per barrel at the time of writing.


The 200-day Simple Moving Average (SMA) for WTI crude oil was broken on Monday, marking the third straight day of increases. Due to a limited worldwide supply and expectations that a Chinese stimulus package will help the country’s economy recover after recent difficulties, oil prices appear to be on the rise.

The Manufacturing and Services PMIs for European nations and the UK were weak, and the American Indexes were mixed. It’s important to keep in mind that a downturn in the world economy could lower demand for oil and lower its price.

Markets anticipate a 25 basis point rise announcement from the Fed on Wednesday, but they are still placing their bets on the slim chance of another hike after July. The ECB’s 25-bps rate hike on Thursday has been mostly factored in by investors on the European side, but the chances of increases in September, October, and December have decreased to 55%, 70%, and 75%, respectively. Similar to this, markets gambled on a less aggressive BoE as the odds of a 50-bps raise on 3 August have dropped to 35% after being substantially priced in.

Given that higher rate hikes tend to slow down economies and reduce demand for commodities like Oil, dovish bets may therefore be a positive for energy prices. Therefore, policy announcements from the aforementioned banks will be carefully watched for hints about forward direction.