WTI Oil Rallies As China Adjusts Its COVID Policy

Key Insights

• WTI gained strong upside momentum after China decided to relax some COVID-related rules. 
• Natural gas tested resistance at $6.40.
• Gold moved higher as the U.S. dollar pulled back against a broad basket of currencies. 

WTI Oil Tests Resistance At $90

WTI oil moved towards the $90 level as traders reacted to China’s decision to relax its COVID rules. The adjustments included shorter quarantines for close contacts and removal of penalties for airlines who brought too many infected people. In addition, China will stop searching for “secondary” contacts.

At first glance, the adjustments should not lead to a major increase in demand for oil. However, it is the first step in the right direction for oil markets, so traders react accordingly.

Currently, WTI oil is trying to settle above the $90 level. In case this attempt is successful, it will move towards the resistance near the $91.50 level. A move above $91.50 will push oil towards the $93 level.

On the support side, the nearest support level for WTI oil is located at $88.50. If WTI oil declines below this level, it will head towards the next support at $87.75. A successful test of the support at $87.75 will open the way to the test of the support level at $86.20.

Natural Gas Continues To Rebound

Natural gas  moved towards the resistance at $6.45 as prices continued to rebound after the recent sell-off.

Yesterday’s EIA report, which indicated that working gas in storage increased by 79 Bcf from the previous week, provided material support to natural gas markets.

In case natural gas manages to settle above the resistance at $6.40, it will gain additional upside momentum and move towards the resistance level at $6.75.

Gold Tries To Settle Above $1765

Gold is trying to settle above the resistance level at $1765 as the U.S. dollar remains under strong pressure against a broad basket of currencies. Treasury yields are moving higher after yesterday’s strong sell-off, but gold traders prefer to focus on the weakness of the American currency.

Meanwhile, silver traders decided to take some profits off the table after the recent rally. Currently, silver settled near the $21.50 level. Platinum is trading near the 1050 level, while palladium managed to get above the $2000 level.

Copper Moves Closer To The $4.00 Level

Copper markets rallied towards the $3.90 level as traders cheered the news from China, which is the biggest consumer of copper.

In case copper manages to settle above the $3.90 level, it will head towards the important $4.00 level. RSI is very close to the overbought territory, but there is enough room to gain additional upside momentum in case the right catalysts emerge.

For a look at all of today’s economic events, check out our economic calendar.