• Crude Oil Correction: WTI crude futures dropped below $87 per barrel on Monday, driven by a likely technical correction. Despite remaining close to November 2022 highs, concerns about China’s sluggish economic growth and stronger-than-expected U.S. economic data influenced oil prices.
• China’s Growth Worries: The world’s largest crude importer, China, is yet to convince markets of a significant economic turnaround. Persistent concerns about its growth have impacted commodity markets, including oil.
• US Economic Data: Stronger-than-expected U.S. economic data raised fears of potential interest rate hikes by the Federal Reserve. These concerns pushed the U.S. dollar higher and exerted pressure on commodities.
• Global Supply Tightening: Despite recent corrections, oil prices have remained near their highest levels since November 2022. This is attributed to tightening global supplies, with Saudi Arabia and Russia extending voluntary supply cuts of 1.3 million barrels per day until year-end.
• Dollar Index: The dollar index eased below 105 on Monday, retreating slightly from six-month highs. Investors were cautious ahead of key U.S. inflation readings, with expectations of a 3.6% annual inflation rate due to energy cost pressures.
• Rate Hike Expectations: Markets are now pricing in a nearly 50% chance of a rate increase by the Federal Reserve in November, following an anticipated pause in September.

Analyzing the weekly volume profile for WTI Crude Oil, there is a notable double distribution or p-shaped structure. This structure suggests that market participants may be forming their bias based on the perception of the Point of Control (POC) level. Additionally, traders seem to be leaning on the extremes of the upper distribution for clues about market sentiment.

In recent trading, there was selling activity around the upper extreme of the distribution. As a result, the market might aim to test the lower distribution to identify potential buyers who are looking to add to their core positions. The POC level is currently acting as a support level, reinforcing the buying perspective at this time.

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