WTI: Mildly bid above $43.00, looks for fourth monthly gains

• WTI prints the most gains after three days of downbeat moves, $43.34 guards the upside off-late.
• Market’s risk-on sentiment joins a weak US dollar to propel the commodity prices.
• Vaccine hopes, stimulus expectations and China PMI favor the bulls as well.
• Fears of weakness in demand, increase in supply keep the bears hopeful.

WTI seesaws around $43.30, up 0.32% on a day, ahead of Monday’s European session. In doing so, the black gold shrugs off the previous three days’ bearish momentum amid trade-positive market sentiment. However, fears of oversupply and a lack of demand keeps guarding the energy benchmark’s short-term upside.

Risk-takers are cheering the odds of the US stimulus as the latest updates suggest the opposition Democratic Party is ready to take a $1.3 trillion offer. The talks are stuck for the last three weeks as multiple issues, starting from the total amount, delay the much-awaited decision from America.

Also on the positive side could be the coronavirus (COVID-19) vaccine hopes. Following the US health official Dr.Fauci’s signal for an early cure to the pandemic, comments from Japanese diplomat Suga also raised expectations that the deadly virus will end soon.

Furthermore, China’s better than forecast official PMI data and Japan’s record run-up in preliminary Industrial Production (MoM) also favor the energy bulls.

Against this backdrop, stocks in Asia-Pacific mark notable gains led by Japan’s Nikkei 225 whereas the S&P 500 Futures refresh record high above 3,500.

On the contrary, hopes of further supply, mainly due to the increasing discovery of oil rigs, join fears of receding demand from China to exert downside pressure on the commodity prices. “China’s crude imports in September are set to fall for the first time in five months as record volumes of crude are stored in and outside of the world’s largest importer, data from Refinitiv and Vortexa showed. Higher oil and gas prices are also encouraging U.S. producers to resume drilling as the country’s oil and gas rig count rose by three to 254 in August, according to data from energy services firm Baker Hughes Co. Separately, Saudi Aramco discovered two new oil and gas fields in the northern regions, the kingdom’s energy minister said on Sunday, state news agency SPA reported,” said Reuters.

Looking forward, a lack of oil-specific data will keep the WTI prices on the mercy of US dollar moves, market sentiment. Among them, Federal Reserve Governor Richard Clarida’s speech will be the key to watch.

Technical analysis

The energy benchmark flashed Doji candlestick formation on Friday, suggesting the reversal of the previous day’s declines, but couldn’t justify the moves amid sluggish MACD. While observing minimal reaction to the candlestick formations, coupled with dull momentum indications, the energy traders can be considered waiting for a clear direction near the multi-week high. As a result, a short-term rising-wedge formation will be the key to follow.

Read: WTI Price Analysis: Multiple Doji on D1 suggests traders’ indecision above $43.00