WTI price holds near $73 as US dollar strengthens
WTI price edges lower amid stronger US dollar and supply concerns
West Texas Intermediate (WTI) crude oil prices hovered around $73 during Thursday’s Asian session, weighed down by the stronger US dollar. The greenback's appeal as a safe-haven currency strengthened amid growing concerns over inflationary pressures, making oil more expensive for international buyers.
Tamas Varga, an analyst at oil broker PVM, noted that the dollar’s gains reflect market anxieties over renewed inflation risks in the US.
Oil traders are closely monitoring US employment data due on Friday, as stronger-than-expected figures could bolster the US dollar and exert further pressure on oil prices. Additionally, market participants will watch for updates on geopolitical developments and the Federal Reserve's policy direction to gauge the commodity's next move.
USOIL price movement (Nov 2024 - Jan 2025) Source: TradingView.
US Crude Inventories and Supply Dynamics
Despite the decline, downside risks for WTI remain limited due to ongoing supply concerns. According to the US Energy Information Administration (EIA), crude oil stockpiles fell by 959,000 barrels for the week ending January 3, marking the seventh consecutive weekly drawdown. This exceeded the market consensus of a 250,000-barrel drop, indicating continued tightness in US supplies.
Global supply tensions could also intensify as the Biden administration prepares to implement additional sanctions on Russian oil exports ahead of Donald Trump’s inauguration on January 20. These sanctions, combined with restrictions on Iranian crude, could further constrain global supplies, supporting oil prices.
Technical Outlook and Market Sentiment
WTI remains above the key pivot point at $72.83, with technical indicators pointing to potential bullish momentum if prices hold steady. The 50-day exponential moving average (EMA) at $72.24 and the 200-day EMA at $70.83 provide robust support levels. A sustained move above $72.83 could trigger a rally toward $75.24, with further resistance at $76.48. On the downside, a break below $71.84 may invite selling pressure, potentially testing support at $70.80.
Similarly, Brent crude is consolidating above $75.72, with the 50 EMA at $75.64 reinforcing near-term support. Analysts point to $76.89 as the next resistance, with $74.69 serving as a key support level.
In our previous analysis, we highlighted that WTI was trading near $75 amid tightening supply and inventory drawdowns. This trend continues, although increased dollar strength and new geopolitical factors are shaping short-term price dynamics.
