- Crude oil extended its declines again on Wednesday below 78.6% Fibo target.
- Oil prices are feeling the pressures of a deteriorating global economic backdrop.
The price of a barrel of oil extended its decline on Wednesday faced with a barrage of negative inputs which leaves the outlook bleak for the bulls. At the time of writing, the price of a barrel of West Texas Intermediate crude is at $52.59, travelling between $52.21 and $54.42 while trading down -2.70% on the day. As for the futures contract, the front month, for November delivery lost 96 cents, or 1.8%, to $52.66 a barrel on the New York Mercantile Exchange, poised for the lowest front-month contract settlement in almost two months.
Oil prices are feeling the pressures
Oil prices are feeling the pressures of a deteriorating global economic backdrop despite the Middle East risks as supplies are seen on the rise according to the Energy Information Administration’s data released today. U.S. crude supplies rose for a third week in a row, by 3.1 million barrels for the week ended Sept. 27 – They were forecast to climb by 1.3 million barrels.
Elsewhere, analysts at TD Securities reported that Venezuelan crude exports slumped to its lowest since the 1950s, but also noted that CTAs have continued to add shorts across the energy complex as firming downside trend bets add to the bearish sentiment in crudes, heating oil and natural gas.
“Despite sky-high geopolitical uncertainty in the region, with Iran continuing to expand its uranium enrichment program and as the US sends additional troops and defence systems to Saudi, the prospect of lower demand growth and continued strength in supply is keeping the market comfortable in looking past the risks of further disruptions for now,”
the analysts explained.
WTI levels
On a technical basis, the bears have eyes for a full retracement back to the year’s lows around 50.50. This follows a recent break of trendline support and the confluence of the 200, 50 and 20-daily moving averages as well as a break of the 78.6% Fibonacci level (a reenactment target of the August rally) to penetrate below the 53 handle.
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