WTI Price Analysis: Rebounds above $85 despite overbought conditions

• WTI price snaps the corrective mode from seven-year highs, recaptures $85.
• PBOC LPR cut, weaker US dollar and risk reset underpin the black gold.
• Acceptance above $85.50 is critical to take on the multi-year top once again.

WTI (NYMEX futures) is trading close to $85.50, having staged a solid comeback from a drop to near the $84.60 region.

The correction in oil prices came on the heels of a dour mood on Wall Street overnight, as rallying Treasury yields weighed on the sentiment while traders fret over the Fed rate hike outlook.

The resumption of the key Iraq-Turkey oil pipeline in full flow, after the explosion, also collaborated with the pullback in WTI alongside discouraging monthly report from the International Energy Agency (IEA).

However, the latest recovery in the risk sentiment, in response to the Chinese central bank’s mortgage rate cuts announcement, helps oil price resume the upbeat momentum.

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