- Resurgent US dollar strength amid escalating US-China trade spat keeps oil under pressure.
- Will the renewed US sanction on Iran help keep the floor under the prices?
WTI (oil futures on NYMEX) experienced some volatile moves in the European session, although managed to hold above the $ 66.50 support area. However, with the US dollar back in demand, it remains to be seen if the commodity can resist the bearish pressure.
WTI: Further downside remains in play
The barrel of WTI failed its attempts to recover from yesterday’s 3 percent slide on multiple occasions, as the bears continue to guard the $ 67.10 level amid resurgent US dollar buying across the board.
Markets appear to lose confidence in higher-yielding assets amid escalating US-China trade tensions and prefer to hold the world’s reserve currency (US dollar) in times of uncertainty and market unrest.
Moreover, the sentiment around the black gold continues to remain undermined by an unexpected rise in the US gasoline stocks, as reported by the Energy Information Administration (EIA) a day before.
The EIA showed that the US crude inventories fell 1.4 million barrels in the latest week, less than half the 3.3 million-barrel draw analysts had expected while Gasoline stocks rose by 2.9 million barrels, compared with expectations for a drop of 1.7 million-barrel drop, according to Reuters.
Looking ahead, the prices may find some temporary support from the global supply concerns following the renewed US sanctions on Iran. However, the USD dynamics will continue to drive the sentiment around oil ahead of Friday’s US rigs count data.
WTI Technical Levels
According to the Swissquote Research Team, “Long positions above 66.30 with targets at 67.45 & 68.00 in extension. Below 66.30 look for further downside with 65.75 & 65.35 as targets. The RSI has broken up its 30 level. Crude Oil rebounds after hitting the July 18 low at 66.3.”
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