WTI drops over 0.5% as dollar rises in risk-off trade

WTI loses ground as decline in stock futures lifts US dollar.
OPEC+ decided to raise output by 2 million barrels per day last week.
US stimulus talks may lead to risk reset and put a floor under oil.

Omkar Godbole FXStreet Contributor

West Texas Intermediate (WTI) crude, a North American benchmark for oil, is flashing red on Monday with the American dollar drawing bids amid risk-off trade in the US stock futures.

At press time, a barrel of WTI is changing hands at $40.32, representing a 0.6% decline on the day. Meanwhile, the dollar index (DXY), which tracks the value of the greenback against majors, is trading 0.14% higher on the day at 96.15.

The S&P 500 futures are down 0.36% and pushing the safe-haven dollar higher with the European leaders struggling to hammer out a post-coronavirus economic recovery plan. The European Union Summit scheduled on Friday to iron out differences between the member nations on size and scope of the recovery plan was extended to an unscheduled third day on Sunday. So far, the impasse remains unbroken.

Apart from the Intermarket factors, a recent decision by the OPEC+, a group of major producers led by Saudi Arabia and Russia, to boost supplies by 2 million barrels per day could be hurting the black gold. The cartel forecast that that oil demand would grow, compensating for the increased supply. So far, however, the bullish demand forecast has failed to put a strong bid under oil.

Looking ahead, the black gold could continue to take cues from the US dollar and equity markets. Also, newsflow related to Saudi King Salman's health may affect prices.

Traders would also keep an eye on the talk of additional fiscal stimulus in the US. The Congress is set to begin debating a new aid package this week to help the economy absorb the shock arising from the second wave of the coronavirus outbreak.

Technical levels

WTI

Overview
Today last price	40.51
Today Daily Change	-0.26
Today Daily Change %	-0.64
Today daily open	40.77

Trends
Daily SMA20	40.1
Daily SMA50	36.8
Daily SMA100	32.26
Daily SMA200	44.27

Levels
Previous Daily High	41.05
Previous Daily Low	40.19
Previous Weekly High	41.45
Previous Weekly Low	39.3
Previous Monthly High	41.65
Previous Monthly Low	34.45
Daily Fibonacci 38.2%	40.52
Daily Fibonacci 61.8%	40.72
Daily Pivot Point S1	40.29
Daily Pivot Point S2	39.81
Daily Pivot Point S3	39.43
Daily Pivot Point R1	41.15
Daily Pivot Point R2	41.53
Daily Pivot Point R3	42.01

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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