- Repeated failures on the 58 handle for higher levels has lead to the deterioration in the price.
- Prices appear to be discounting a peaceful resolution to the Saudi crisis.
The price of a barrel of oil declined on Tuesday as forever changing outlooks for Suadi oil production makes for volatility on the black gold, with renewed optimism that Saudi Arabia is making progress in restoring production. West Texas Intermediate crude, on a spot basis, fell over 2% on Tuesday, dropping from a high of $58.49 to a low of $56.85. Futures, for November delivery, lost $1.09, or 1.9%, at $57.55 a barrel on the New York Mercantile Exchange.
A peaceful resolution to the Saudi crisis is priced in.
“While the EU presented a united front with the United States in blaming Iran for sole responsibility in the attacks on Saudi’s energy sector, crude markets remain concerned that weak demand growth and rising non-OPEC supply will keep crude markets from tightening,” analysts at TD Securities explained.
“While participants are anxiously awaiting an announcement from the Saudis on the geographic location of the cruise missiles launches, prices appear to be discounting a peaceful resolution to the crisis. In this context, crude oil is not ripe for unconditional love.”
WTI levels
Repeated failures on the 58 handle for higher levels has lead to the deterioration in the price all the way back to the 61.8% Fibo and August resistance just below the 57 handle. For now, the 50 and 200 daily moving averages are holding up. and offering support. On the upside, a clearing of the 59 handle will ope prospects for the April highs at 66.58 on the wide.
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