- Western Texas Intermediate erases last Friday’s gains, tumbles more than 3%.
- Technical factors and China’s Covid-19 crisis increased traders’ worries about diminishing oil demand.
- WTI Price Analysis: A daily close below the 20-DMA to pave the way towards $75.00.
Western Texas Intermediate (WTI), the US crude oil benchmark tanks more than 3% on Tuesday, due to increased concerns of diminishing demand from China, as the country battles spurring Covid-19 cases amidst increasing worries for a worldwide recession. At the time of writing, WTI is trading at $77.78 per barrel, below its opening price, after reaching a high of $81.44.
WTI halted its upward trajectory at the 50-day Exponential Moving Average (EMA) at $80.32 a barrel. An increase of Covid-19 cases in China threatens to dampen demand in the second-largest economy and the world’s leading oil importer.
On Sunday, the International Monetary Fund (IMF) Director Kristalina Georgieva said that the global economy faces “a tough year, tougher than the year we leave behind.” Additional central bank tightening and weaker growth expected by the worldwide economy keep recessionary risk skewed to the upside.
Saxo Bank analysts wrote, “Another volatile year undoubtedly lies ahead with multiple uncertainties still impacting supply and demand. The two biggest that potentially will weigh against each other in the short term remain the prospect for a bumpy recovery in Chinese demand being offset by worries about a global economic slowdown.”
WTI Price Analysis: Technical outlook
From the daily chart perspective, WTI is neutral-to-downward biased. The 50-day EMA, around $80.31, capped the rally, while Tuesday’s price action is witnessing sellers stepping aggressively, dragging WTI’s price below $78.06, leaving the 20-day EMA above. If WTI achieves a daily close below the latter, it will exacerbate a fall toward the December 16 low at 73.36, ahead of the December 9 swing low of $70.10.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD battles 1.0700 amid calmer risk tone, German ZEW eyed
EUR/USD is juggling in a narrow range just above the 1.0700 level in early Europe. The pair is sidelined amid a relatively calmer risk tone and a pause in the US Dollar decline. Markets digest the latest global banking sector developments ahead of Germany's ZEW survey.
GBP/USD remains pressured around 1.2250 as US Dollar recovers
GBP/USD is on a corrective move lower while testing 1.2250 in the early European morning. A broad rebound in the US Dollar is weighing on the pair, despite a better market mood. Investors stay cautious amid the global banking woes and ahead of the Fed decision.
Gold lingers below the $2,000 mark as the market awaits Fed’s policy decision
Gold price reached a fresh yearly high on Monday this week, with XAU/USD hitting the $2,000 mark for only the third time in recorded history; the last time was during the COVID era. The robust bull run began from the March low of around $1,800, and gold prices have not looked back since.
Coinbase argues core staking services are not securities in its letter to SEC
Coinbase submitted a comment letter to the US financial regulator asking for clarification on core staking services. The exchange explained that staking services fail every single prong of the Howey test, therefore, cannot be treated as securities.
FX thoughts for the week
Do central banks face a conflict between their inflation mandate and financial stability? The markets are still grappling with this question and confidence in the financial sector has not fully recovered. For now, central banks are responding with a conditional no.