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WTI dives to mid-$63.00s, weekly lows ahead of EIA data/FOMC minutes

  • WTI remained under heavy selling pressure for the second consecutive session on Wednesday.
  • COVID-19 jitters, the risk-off mood and stronger USD all contributed to the intraday selling bias.
  • Investors now look forward to the EIA report for some impetus ahead of the key FOMC minutes.

WTI crude oil extended the previous day's retracement slide from over two-month tops and witnessed some heavy selling for the second consecutive session on Wednesday. The commodity was last seen trading around mid-$63.00s, down nearly 3% for the day.

Investors remain concerned that the continuous surge in new COVID-19 cases and the imposition of new restrictive measures in some Asian countries could hinder fragile fuel demand recovery. Adding to the bearish pressure was Tuesday's report by the American Petroleum Institute (API), which showed a modest rise of 620,000 barrels in the US crude inventories.

Meanwhile, worries that rising inflationary pressure might force the Fed to raise interest rates sooner rather than later took its toll on the global risk sentiment. This was evident from a selloff in the equity markets, which was seen as another factor that collaborated to drive flows away from perceived riskier assets, including oil.

The global flight to safety, along with a goodish pickup in the US Treasury bond yields allowed the US dollar to reverse an early dip to the lowest level since January. This further acted as a headwind for dollar-denominated commodities and dragged spot prices lower ahead of the official US inventory data from the Energy Information Administration (EIA).

The report is scheduled for release during the early North American session, at 14:30 GMT, though the market focus will remain glued to the FOMC monetary policy meeting minutes. Investors will closely scrutinize the minutes for signs that there was at least some discussion on tapering QE. This will play a key role in influencing the USD price dynamics and the broader market risk sentiment in the near term.

Technical levels to watch

WTI

Overview
Today last price63.68
Today Daily Change-1.58
Today Daily Change %-2.42
Today daily open65.26
 
Trends
Daily SMA2064.2
Daily SMA5062.67
Daily SMA10059.25
Daily SMA20050.64
 
Levels
Previous Daily High67
Previous Daily Low64.13
Previous Weekly High66.63
Previous Weekly Low63.12
Previous Monthly High65.4
Previous Monthly Low57.66
Daily Fibonacci 38.2%65.23
Daily Fibonacci 61.8%65.91
Daily Pivot Point S163.93
Daily Pivot Point S262.6
Daily Pivot Point S361.06
Daily Pivot Point R166.79
Daily Pivot Point R268.33
Daily Pivot Point R369.66

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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