Home WTI consolidates the biggest losses in 10 weeks to attack $42.00
FXStreet News

WTI consolidates the biggest losses in 10 weeks to attack $42.00

  • WTI keeps pullback from $41.43, the lowest level in one month.
  • Heavy draw in EIA inventories couldn’t disappoint energy bears amid chatters concerning Iraq’s push for exemption from OPEC+ output cut.
  • US dollar strength, Sino-American tussle and gains in equities are additional reasons for the commodity traders to stay bearish.

WTI extends recovery moves from the monthly low towards $42.00, currently around $41.88, before Thursday’s Tokyo open. The oil benchmark ignored official inventory data by the US Energy Information Administration (EIA) while marking the biggest losses since June 24. Catalysts including the US dollar strength and rumors that Iraq may avail exemptions from the OPEC+ output cut mostly weighed on the quote earlier. Also pleasing the sellers could be the gains in equities that suggest better returns and lure funds off the riskier assets.

As per the EIA’s latest update for the week ending August 28th, the Crude Oil Stocks Change in the US was -9.4 million barrels compared to analysts estimate of -1.9 million barrels. Even so, the details suggest that total products supplied over the last four-week period averaged 18.3 million barrels a day, down by 15.9% from the same period last year.

Additionally, Iraq’s Oil Minister HE Ihsan Abdul Jabbar Ismaael said in a local media outlet that they will seek an exemption from the OPEC and its allies (OPEC) output cut deal during the first quarter of 2021. It should, however, be noted that the country’s conformity with oil cuts at above 100% in August.

The US dollar index (DXY) marked the biggest losses in two weeks while extending the pullback from a 28-month low on Wednesday. The greenback’s recovery ignored downbeat prints of ADP Employment Change while cheering hopes of further stimulus and nearness to the coronavirus (COVID-19) vaccine.

It should also be noted that the S&P 500 refreshed record high above 3,500 but the US 10-year Treasury yields slipped to 0.65% the previous day.

Looking forward, traders will keep eyes on the US data, mainly the ISM Services PMI, for fresh impetus. Also in the spotlight will be the Sino-American tussle and the COVID-19 news that have been mixed off-late. While the US and China keep threatening each other, virus strength seems to recede ahead of the vaccine announcements.

Technical analysis

A clear bounce off 50-day SMA needs to cross the 21-day SMA level of $42.63 to regain the strength in challenging the immediate resistance line near $43.45. Alternatively, the quote’s declines past-$42.63 will direct the bears to the $40.00 threshold.

 

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.