WTI experiences a decline amidst China’s real estate challenges, preceding the Federal Open Market Committee’s (FOMC) meeting.

WTI oil experiences a notable decline of over 1.50%, influenced by challenges in China’s property sector and the strength of the US Dollar. Despite geopolitical tensions, oil prices face pressure due to global economic uncertainties and central bank policies. The market eagerly anticipates insights from the API and EIA reports on US crude and distillate stocks amidst the prevailing economic instability.

On Monday, West Texas Intermediate (WTI) sharply drops by more than 1.50%, unable to breach a crucial technical resistance level. This decline is exacerbated by concerns about demand stemming from China’s property crisis, despite escalating tensions in the Middle East. Traders are preparing for the US Federal Reserve’s decision to maintain a robust US Dollar. As of the current moment, WTI is traded at $76.90.

Crude oil grapples with challenges in overcoming key resistance levels, facing a decline influenced by prevailing risk sentiment. The real estate crisis in China intensifies, with a Hong Kong court mandating the liquidation of the prominent property entity, China Evergrande Group. According to sources cited by Reuters, “The situation in China is the most significant obstacle to the entire market, explaining the market’s continued retreat from the war risk premium.”

Following an attack on the Slavneft-YANOS refinery in Yaroslavl, Russia, on Monday, oil prices struggled to gain momentum. Simultaneously, the cautious stance of global central banks is contributing to a marginal downturn in oil prices, with the Federal Reserve (Fed) and the Bank of England (BoE) taking the spotlight for the week. Both central banks are anticipated to maintain unchanged interest rates, although the Fed’s support for the US Dollar (USD) is evident.

The US Dollar Index (DXY), which gauges the USD against six other currencies, shows a 0.14% increase at 103.61, posing a challenge for assets denominated in US Dollars.

In summary, oil traders are eagerly awaiting the American Petroleum Institute’s (API) stockpile report in the US on Tuesday, preceding the US Energy Information Administration’s (EIA) report on Wednesday.

As per a Reuters poll, expectations indicate a reduction in US crude oil and distillate inventories last week, while gasoline inventories are anticipated to rise.

In the technical analysis of WTI (West Texas Intermediate), attempts to surpass the 100-day moving average (DMA) at $79.35 proved unsuccessful. This resulted in a resurgence of selling pressure, causing oil prices to fall below the 200-DMA situated at $77.40. The decline extended below the $77.10 per barrel mark. A decisive daily close below this level could expose the $76.10 figure, followed by the 50-DMA at $73.44. Additional downside potential is identified around $73.05.

On the flip side, if buyers manage to push the price above the $77.01 threshold, a potential test of the 200-DMA is in prospect. This scenario suggests a possibility of a reversal or a renewed upward movement in oil prices.

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