WTI revisits 200-day SMA hurdle after Monday's 4% drop

West Texas Intermediate (WTI), the North American oil benchmark, is trading near $39.65 at press time, having failed to clear the 200-day simple moving average (SMA) hurdle at $40.03 an hour ago. 

Prices fell by more than 4% to $38.87 on Monday as financial markets turned risk-averse on the resurgence of coronavirus. Prospects of Libya resuming oil exports added to bearish pressures around the black gold. 

COVID concerns

Investors sold oil and other risk assets on Monday on fears new coronavirus restrictions could cause bigger economic damage than the second quarter. 

On Monday, German Health Minister Jens Spahn took note of the worrying rise in the COVID cases in France, Austria, and the Netherlands and warned that Germany would sooner or later import cases. 

Meanwhile, the former US Food and Drug Administration Commissioner Scott Gottlieb said that the nation is likely to experience "at least one more cycle" of the virus in the fall and winter.

The US stocks fell sharply, with the S&P 500 hitting the lowest level since July. Gold, a traditional safe haven, declined by 3%, while the dollar index, which gauges the greenback's value against majors, rose more than 5%. 

Libya to resume oil exports

Apart from risk-off, Libya's plan to reopen its oil industry likely weighed over oil prices. 

Analysts at investment bank Goldman Sachs believe Libya could quickly resume its oil exports, as it holds large inventory at ports. The bank expects the nation's oil output to rise to 550,000 barrels per day by the end of December. 

Oil is likely to remain under pressure on Tuesday on renewed coronavirus fears and Libya oil news. Traders, however, should keep an eye on potential reversal higher in the US equities. Federal Reserve's chairman Jerome Powell is likely to reiterate the central bank's dovish stance during this testimony to Congress, scheduled at 14:30 GMT. 

Technical levels