|

WTI tests 50-day SMA support on persistent demand concerns

  • WTI nurses losses as demand concerns persist despite coronavirus vaccine news. 
  • Europe's lockdown restrictions threaten to derail the fragile economic recovery.

The West Texas Intermediate (WTI) crude is feeling the pull of gravity during Tuesday's Asian trading hours, with investors pricing prospects of a renewed coronavirus-induced slowdown in Europe and the US. 

The North American oil benchmark tested the 50-day simple moving average (SMA) support at $39.46, having hit a high of $41.33 on Monday. 

Demand concerns overshadow vaccine news

Major European economies such as France and Germany have reimposed economically-painful lockdown restrictions to contain the second wave of the virus. The US, too, is facing a resurgence of the virus, which caused a record economic contraction in the second quarter. 

Put simply, demand conditions are likely to weaken in the near-term irrespective of the fact that the world has moved close to a coronavirus vaccine in the past 24 hours. According to Rystad Energy, lockdowns in Europe could destroy 1 million barrels per day of oil demand by the end of this year. As such, oil is on the defensive and may suffer a deeper decline if the virus numbers continue to rise.

US oil inventory numbers are due later Tuesday from the American Petroleum Institute, and on Wednesday from the Energy Information Administration, according to Reuters. 

On Monday, the US drugmaker Pfizer announced positive results for its coronavirus vaccine, sending stock markets and other risk assets higher. WTI rallied from $37.34 to $41.33. The most notable move was in the US junk (high risk) bond yield, which fell by over 30 basis points to hit record lows (bond prices and yields move in opposite directions). 

Technical levels

WTI

Overview
Today last price39.9
Today Daily Change-0.33
Today Daily Change %-0.82
Today daily open40.23
 
Trends
Daily SMA2039.27
Daily SMA5039.54
Daily SMA10040.44
Daily SMA20037.42
 
Levels
Previous Daily High41.55
Previous Daily Low37.43
Previous Weekly High39.55
Previous Weekly Low33.85
Previous Monthly High41.93
Previous Monthly Low35.08
Daily Fibonacci 38.2%39.98
Daily Fibonacci 61.8%39
Daily Pivot Point S137.92
Daily Pivot Point S235.61
Daily Pivot Point S333.8
Daily Pivot Point R142.05
Daily Pivot Point R243.86
Daily Pivot Point R346.17

Author

Omkar Godbole

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

More from Omkar Godbole
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD clings to small gains near 1.1750

Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key data releases from the US and the ECB policy announcements.

GBP/USD edges higher toward 1.3400 ahead of US data and BoE

GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.

Gold stuck around $4,300 as markets turn cautious

Gold loses its bullish momentum and retreats below $4,350 after testing this level earlier on Monday. XAU/USD, however, stays in positive territory as the US Dollar remains on the back foot on growing expectations for a dovish Fed policy outlook next year.

Solana consolidates as spot ETF inflows near $1 billion signal institutional dip-buying

Solana price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout. On the institutional side, demand for spot Solana Exchange-Traded Funds remained firm, pushing total assets under management to nearly $1 billion since launch. 

Big week ends with big doubts

The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.

Solana Price Forecast: SOL consolidates as spot ETF inflows near $1 billion signal institutional dip-buying

Solana (SOL) price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout.