WTI slips below $40.50 amid US dollar recovery, API data eyed
- WTI refreshed the intraday low after reversing from $40.79.
- US dollar regains upside momentum amid hopes of further stimulus.
- Challenges to the US-China trade deal add downside pressure on oil prices.
- API data, USD moves become the key amid a light calendar.
WTI bounces off the day’s low of $40.31 to $40.422, down 0.60% intraday, during early Tuesday. The black gold recently dropped after the US dollar (USD) started recovering the previous day’s losses. Also on the negative side could be downbeat news from China and USD positive updates from American.
Having marked the biggest losses in one month, the US dollar index (DXY) bounces off September 23 low to 94.22 by the time of the press. Given the inverse correlation between commodities and the greenback, the latest moves by the US currency weigh on the WTI crude oil.
The US dollar gains could be attributed to the news suggesting House Democrats’ readiness to alter the coronavirus (COVID-19) aid package demands.
Further, the South China Morning Post (SCMP) came out with the news that points towards further hardships for the Sino-American trade deal. The reason is Beijing’s ability to purchase not even one-third of the agreed US goods through August.
Also, challenging the US-China relations, which weigh on the energy demand, are comments from China Daily that said, “The Sinophobic policies of the United States are causing losses to China in the near term, but in the long run, China could benefit from them.
Against this backdrop, S&P 500 Futures gain 0.30% whereas stocks in Asia-Pacific are also mildly positive.
Moving on, oil traders will keep eyes on the greenback moves ahead of the weekly inventory data from a private provider, the American Petroleum Institute (API).
Technical analysis
Unless breaking $41.00 resistance, comprising 200-bar SMA and 61.8% Fibonacci retracement level of WTI’s August-September downside, oil buyers are less likely to be convinced.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
