WTI slips down a gear in thin trade, demand concerns resurface

Oil prices were sinking on Monday as the US dollar climbed back from out of the abyss at the same time that Saudi Arabia made sharp cuts to crude contract prices for Asia.

Both futures and spot CFDs are down on the day with 

Brent crude futures falling 16 cents to $72.45 a barrel earlier and US West Texas Intermediate crude dropping 12 cents to $69.17 a barrel.

WTI CFD spot last traded near $68.90 and down some 0.45%. The range on the day so far has been $68.28 the low vs $69.46 the high. 

On Sunday, Saudi Aramco notified customers in a statement that it will cut October official selling prices (OSPs) for all crude grades sold to Asia, its biggest buying region, by at least $1 a barrel.

The Saudis are concerned about demand in the region which is what the markets are reacting to today. 

OPEC+ are raising output by 400,000 barrels per day (bpd) each month between August and December at a time where fears of a global slowdown are gripping markets following Friday's US Nonfarm Payrolls miss.

The spread of the delta variant has been blamed for the dismal outcome where the numbers was a third of what had been expected in terms of jobs creation in the world's largest economy. 

However, the downside has been limited on the back of supply concerns in the US region following the damage to production facilities in the Gulf Coats owing to Hurricane Ida.

Reuters reporter that ''about 1.6 million barrels of crude oil remained offline, with only about 100,000 barrels added since Saturday. Another 1.8 billion cubic feet per day of natural gas output also was shut-in.''

''The hurricane also led US energy companies to cut the number of oil and natural gas rigs operating for the first time in five weeks, data from Baker Hughes showed on Friday. The oil rig count last week fell the most since June 2020,'' the news agency reported. 

Meanwhile, the prospects of the $70 are dwindling. 

''With the market consensus now shifting away from expected deficits and toward more balanced markets, rallies north of $70/bbl may be hard to sustain,'' analysts at TD Securities argued. 

WTI technical analysis

The price has declined to below what might be regarded as trend-line support.

However, the decline, so far, is hardly convincing and there are prospects that demand could come in near the 61.8% Fibonacci ratio to fuel a rest-est of the 70 figure and prior daily highs. 

With that being said, a break below the 67 figure would leave bears in control and well below counter-trendline resistance.