WTI OIL outlook: Crude oil collapses on growing demand fears

Slobodan Drvenica Windsor Brokers

WTI OIL

WTI oil extends steep fall into second day, being down 4.5% so far today, after 4.1% drop on Wednesday.
Today's bearish extension broke below key support at $36.11 (08 Sep low) and hit new 4 1/2-month low at 35.35.
Fresh weakness was fueled by growing fears of stall in demand recovery as sharp rise in coronavirus cases and more restrictive measures, threat of further drop in demand.
Strong rise in US crude stocks and decision of OPEC+ group to increase production by 2 million bpd, adds to oversupply fears which could push oil prices significantly lower. Wednesday's close below 200DMA ($37.42) and break below the floor of multi-month range was strong bearish signal that could lead towards deeper correction of Apr/Aug $6.52/$43.75 recovery.
Bears pressure Fibo support at $34.96 (23.6% of $6.52/$43.75), loss of which could spark fresh acceleration towards $30 (psychological) and $29.53 (Fibo 38.2%). Firmly bearish daily techs favor further weakness, but oversold conditions warn that bears may take a breather before resuming. Upticks under broken falling 200DMA expected to offer fresh selling opportunities.

Res: 36.61; 36.96; 37.31; 37.99
Sup: 34.96; 34.33; 32.34; 31.12

Interested in Oil technicals? Check out the key levels

1. R3 40.75
2. R2 39.94
3. R1 38.72
PP 37.92
1. S1 36.7
2. S2 35.89
3. S3 34.67

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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