Oil sees hesitation, WTI trading back into $70

Prices see declines as output vs demand continues to lean towards surplus.
Iranian sanctions are due soon from the US, promising to further hamper oil markets.

Joshua Gibson FXStreet

Crude prices are taking a step back in early Monday trading and WTI barrel costs are sagging back into recent swing lows near the $70/barrel critical handle.

US-led sanctions on Iran are looming ahead, promising to constrain global oil markets in the months to come, especially in the Middle East region, but for now, rising Libyan oil output and record Iraqi exports are driving prices lower.

OPEC also raised their broad average barrels per day output in July and August, which rose another 220,000 bpd to nearly 32.8 million bpd; the move was minor in and of itself, but just enough to continue to outpace production declines in Iran, who has seen their oil markets shrink by 150 thousand barrels last month, and the possibility for further-constrained demand as a result of the ongoing US-China trade conflict.

WTI levels to watch

70.00 is a major technical level for WTI crude prices and buyers will be hoping to springboard off of the major barrier into new highs, though August's peak remains close by at 70.80; failure to break into the 71.00 region will see bears back in front and could send US crude prices back into major technical support from 64.50.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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