Jul 22, 2020
- Risk-off mood exacerbates the pain in WTI.
- Oil pressured by a big build in the US crude inventories.
- Focus on US-China woes, virus and EIA crude stocks data.
WTI (futures on Nymex) is off the lows but remains on the back foot above the 41 level amid the downbeat market mood.
At the press time, the US oil trades at 41.50, still down 1.05% on the day. The black gold hit a daily low of 41.14 after the selling pressure intensified on the deterioration of the risk sentiment.
Fresh US-China tensions over the closure of Beijing’s consulate in Houston, as the US accused China of stealing the intellectual property (IP), dampened the market mood and sent the risk trades tumbling.
S&P 500 futures dropped nearly 0.60% below 3,250 level, in a kneejerk reaction while the safe-haven, US dollar, rebounded to near 95.40 region. The knock in the appetite for the higher-yielding assets exacerbated the pain in the black gold.
The barrel of WTI was already pressured by a bigger-than-expected build in the US crude stockpiles, as reported by the American Petroleum Institute (API) late Tuesday. The API data showed that the US crude inventories rose last week by 7.5 million barrels, against expectations for a draw of 2.1 million barrels, per Reuters.
Meanwhile, the continued surge in the coronavirus cases globally and the looming risks to economic recovery also added to the bearish bias in oil. Looking ahead, oil traders will continue to pay close attention to the developments around the US-China issue and virus updates.
The US crude inventories data due to be published by the Energy Information Administration (API) will be closely eyed for fresh direction in the prices.
WTI technical levels to watch
“Sellers’ dominance past-$41.37 will attack $41.00 and the monthly support line, currently around $40.00. It should, however, be noted that the commodity’s further declines below $40.00 will aim for the monthly bottom around $38.70. Buyers may again target $42.00 and the recent tops near $42.50 during the further rise.,” explains Anil Panchal, FXStreet’s Analyst.
WTI additional levels
Courtesy of the Forex Mix