- WTI carries the gap-down opening to attack the monthly low under $35.00.
- Risk-off runs at full steam amid fears of virus outbreak 2.0.
- Upbeat news from Iraq, Saudi Aramco fail to recall the buyers.
- Virus headlines, OPEC JMMC will be important to watch other than inventory data.
WTI extends the early-Asian weakness while refreshing the intraday low to $34.65, down 5.63% on a day, while heading into the European session on Monday. The oil benchmark fails to cheer weekend news suggesting further supply cuts from Iraq as well as Saudi Arabia’s key producer Saudi Aramco. The reason could be traced from the broad risk-off sentiment backed by the increase in the coronavirus (COVID-19) cases from the US, Tokyo and Beijing.
“Alabama reported a record number of new cases for the fourth day in a row on Sunday. Alaska, Arizona, Arkansas, California, Florida, North Carolina, Oklahoma and South Carolina all had record numbers of new cases in the past three days, according to a Reuters tally.” Additionally, Tokyo flashed the highest cases since May 05 to 47 whereas Beijing called for the partial shutdown after the virus spread through a major food market in the Southern Fengtai district of China.
In addition to the COVID-19 updates but a growing divide between US President Donald Trump and the state governors, due to the latest protest in America, also weigh on the black gold. Furthermore, Beijing’s tough stand in the Hong Kong issue adds to the market’s uncertainty.
As a result, the energy benchmark ignores the weekend news from the Iraqi Oil Minister. Additionally, Reuters’ news that the Saudi Aramco cuts July-loading crude supplies to at least 4 buyers in Asia also failed to get noticed.
Moving on, the oil traders are waiting for Thursday’s Joint Ministerial Monitoring Committee (JMMC) by the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia and Kazakhstan, together forming OPEC+ group. The energy majors are mostly anticipated to offer updates over the individual country’s abidance of output cut accord. However, any surprise news relating to any members’ support/rejection of the production deal may add value to the meeting.
Additionally, the virus updates and the news surrounding the V-shaped economic recovery will also have a say, other than the routine weekly stockpile reports, in determining the black gold’s near-term price moves.
Technical analysis
100-day SMA level of $34.65 gains immediate attention of the sellers, a break of which could drag the quote further down towards May 28 low near $31.30.
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