- WTI futures appreciate more than 2% to reach prices beyond $40.
- Hopes of economic recovery and output cuts are pushing prices higher.
- Fears of a second COVID-19 wave will be weighing on oil recovery.
Front-month WTI futures have appreciated more than 2% on Monday to reach prices above $40, reaching prices only a few cents short of June 8 high at $40.40. A brighter market sentiment with the major economies reopening after the coronavirus lockdowns and tighter supplies by producer countries although the rise of coronavirus infections might weight on oil recovery.
Oil appreciates as market sentiment improves
Hopes of economic recovery, as the main economies start to reopen after the coronavirus shutdowns are buoying risk appetite on Monday, pushing gold and oil higher while the US dollar pulls back. Furthermore, the commitment by producer countries to maintain the output cuts has contributed to the positive trend.
On the negative side, however, the worldwide rise in COVID-19 cases and the threat of new restrictions are dampening the near-term outlook for oil demand. While in the US, the number of coronavirus cases seems to have receded during the weekend, South Korea has warned about a second wave of infections in the country and Germany has seen a significant increase of contagions.
WTI: approaching key resistance at $40.40
If WTI prices manage to consolidate at recent ranges, the next target is June 8 high at $40.40. Above here we might be heading towards $41.03 (March 6 low) and February’s low at $43.70. On the downside, immediate support lies at $39.40 (session low) and below here, $38.38 (Jun 19 low) and $37.15 (Jun 18 low).
WTI key levels to watch
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