WTI breaches $40 mark as talks of OPEC+ output cuts easing weigh
- WTI faces double whammy starting out a fresh week.
- US oil sheds 1.50% and breaks below the $40 mark.
- Broad US dollar bounce also adds to the weakness.
WTI (August futures on Nymex) extends Friday’s sell-off into the European trading this Monday, following a brief consolidation seen above $40 mark earlier in the Asian session.
The selling pressure accelerated around the black gold, as it breached that level amid a broad-based US dollar recovery, despite a better market mood. A stronger greenback makes the USD-denominated oil expensive for foreign buyers.
Meanwhile, talks about a likely easing of the oil output cuts when the OPEC and its allies (OPEC+) meet later this week continue to undermine the sentiment around the barrel of WTI. Markets are expecting the OPEC+ to partially roll back the cuts to 7.7 million barrels per day (bpd), in the face of a recovery in global oil demand.
Meanwhile, the ongoing surge in the coronavirus cases in the US states continue to temper expectations of a V-shaped economic recovery, which also collaborates with the downside in the higher-yielding oil.
Looking ahead, the US weekly crude stockpiles data and COVID-19 updates will be closely eyed for the next direction in oil prices.
WTI technical levels to watch
“61.8% Fibonacci retracement of its June 25 to July 06 upside, around 38.68, will be on their (sellers’) radars. Though, $39.30 and 50% Fibonacci retracement near $39.15 can offer intermediate halts during the fall. On the upside, Friday’s top around $41.00 can act as immediate resistance ahead of the monthly peak close to $41.15. However, the quote’s rise past-$41.00 needs validation from June month’s peak around $41.65 before eyeing February month low near $44.00,” explains Anil Panchal, FXStreet’s Analyst.
WTI additional levels