Analyzing the different VWAP perspectives on WTI Crude oil, it becomes apparent that the market context is skewed towards the upside across all three timeframes: Yearly, Quarterly, and Monthly. This technical outlook suggests a bullish bias. However, the presence of absorption along with the possibility of long liquidations could drive the market towards establishing a pullback, potentially targeting the upper value extremes of the mentioned intervals.

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Taking a deeper look into the medium-term technical perspective, we can discern a market that is fundamentally influenced by supportive factors. The deliberate supply tightening measures by OPEC+ play a significant role in the market’s dynamics. Furthermore, Saudi Arabia’s decision to implement output cuts of approximately 1 million barrels per day in October adds to the upward pressure on prices. An expansion in Chinese manufacturing activity contributes to heightened demand, thus bolstering prices. Moreover, indications of a cooling US economy, which might prompt the Federal Reserve to ease its tightening cycle, have driven prices higher.

However, it’s worth noting that the market faces opposing forces. The presence of elevated interest rates and the ongoing global tightening cycle, combined with a stronger dollar, could exert downward pressure on prices. Nonetheless, the price of WTI oil might find support from the elevated dollar, given its role as a net export asset.

Examining the impact of output cuts further, we also note a decline in the total rig count for crude oil in the United States. As of September 1st, the total rig count stood at 631, slightly down from the previous week’s count of 632. This figure represents the lowest rig count since early February of 2022. This reduction in rig count adds to the overall sentiment in the market, bolstering the prevailing optimism towards elevated oil prices.

Further enhancing our insights, the managed money sector displayed notable activity in WTI Crude oil. Based on the data from the 29th of August, this sector added approximately 8,723 contracts of long positions in conjunction with short covering of around 17,050 contracts. This dynamic is indicative of the bullish sentiment that characterized the market in the preceding week, playing a pivotal role in the imbalanced upward price trajectory that we’ve observed.

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