WTI buyers attack $41.00 amid US-Iran tension, escalating virus woes
|- WTI remains heavy below 50-day SMA, drops from $41.18 to begin the week.
- Trump administration to sanction firms tied to Iranian arms embargo, Tehran says US faces defeat.
- Coronavirus resurgence poses serious challenges to Europe and some parts of Asia.
- Hopes of further stimulus, China’s optimism favor energy bulls.
WTI recovers the early-Asian losses while trading near $41.20 during the pre-Tokyo Asian trading on Monday. In doing so, the energy benchmark keeps trailing 50-day SMA for over two weeks while taking clues from the US-Iran tussle and the coronavirus (COVID-19) headlines.
Fears of supply glut battle hopes of geopolitical challenges…
With the rising cases in the UK and Spain, virus woes are retaking controls, which in turn weigh on the energy prices. Recently, comments from British Chief Health Officer, cited by Reuters, up for publishing on 10:00 GMT, suggested a very challenging winter ahead. Conditions in Spain, India and Brazil are also worsening with the daily jump in new cases and a lack of a cure to the pandemic.
Elsewhere, the restart of oil rigs in the Gulf of Mexico and internal tension amid the Organization of the Petroleum Exporting Countries (OPEC), concerning the output cut accord, also weigh on the WTI prices.
Alternatively, the US and Iran are again at loggerheads as America prepares to sanction over 20 firms tied to Tehran’s building of arms. During the weekend, Iranian President Hassan Rouhani said, per Reuters, “The United States faces defeat in its move to reimpose U.N. sanctions on Tehran.”
It should also be noted that the market’s risk-off tone, as portrayed by 0.10% loss by S&P 500 Futures also weighs on the energy prices.
Looking forward, oil traders may continue watching over the geopolitical headlines and the US dollar moves, amid a light calendar, for near-term direction.
Technical analysis
Friday’s Doji below 50-day SMA highlights $41.30 as the key short-term resistance ahead of July month’s high of $42.52. Meanwhile, the 21-day SMA level of $40.60 and the $40.00 can offer nearby strong supports to the WTI quote.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.