WTI testing bull commitments at $40, suffers at the hands of demand concerns
|- WTI fell below $40 mid-week as investors worry over demand and spread of COVID-19.
- OPEC tapering is also a concern for bullish bets.
West Texas Intermediate crude is currently trading at $39.97 and down by 2.8% having travelled from a high of $41.57 to a low of $39.81.
Despite a second weekly decline in US crude supplies reported by the Energy Information Administration, the price of oil has been pressured as investors move away from risk assets, including oil.
The rising cases of COVID-19 in Europe, in particular, has impacted investor sentiment mid-week.
Europe's COVID-19 plight and prospects for the EUR/USD
All eyes on OPEC
The potential for more economic shutdowns will impede demand for energy, something for which will be in focus next month when the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, meet to discuss output controls.
OPEC compliance with production cuts is has helped to protect the downside for oil prices to date but the prospects of the group tapering could be part of why the bid has been pulled.
''While OPEC+ stopped short of a firm decision on output cuts, the group sent a strong signal of support, warning those that gamble on the group's determination and implying that the November meeting will likely feature a decision on tapering from the group,'' analysts at TD Securities explained.
The analysts are bullish on the longer run of the outlook and have stated, 'with the OPEC+ put nearly at-the-money, we see a potential set-up building for an upside surprise.''
''Normalizing demand expectations, large-scale fiscal stimulus and a potential vaccine announcement shortly following the election, along with an OPEC+ revision to the planned tapering of their historic output deal, should all conspire to offer strong support in energy markets.''
WTI levels
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.