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  • WTI prints a four-day losing streak while attacking the lowest levels since July 10.
  • Saudi Aramco cut Arab Light to Asia to a discount against the benchmark for the first time since June.
  • Trading sentiment stays sluggish amid the virus woes, Sino-American tussle and the US dollar strength.
  • US holiday will curb the market moves, China Trade Balance may entertain intraday traders.

Having closed below 100-day EMA for the first time since May 29 on Friday, WTI extends losses to $39.00, intraday low of $38.80, during the early Monday’s trading. While the coronavirus (COVID-19) woes and the US-China tussle question the energy demand, Saudi Arabia’s oil price cut offered additional strength to the commodity bears.

Saudi Arabia, Russia cite COVID-19 fears…

Bloomberg came out with the news suggesting Saudi Arabia’s price cut while citing the virus woes. “The kingdom’s state producer, Saudi Aramco, reduced its key Arab Light grade of crude by a larger-than-expected amount for shipments to Asia, its main market. It also lowered pricing for U.S. buyers. Aramco cut Arab Light to Asia to a discount against the benchmark oil price used by the Saudis for the first time since June. It’s the second consecutive month of reductions for barrels to the region and the first month in six that U.S. refiners will see a cut. Aramco will trim pricing, too, for lighter barrels to northwest Europe and the Mediterranean region,” said the news.

Elsewhere, Russian energy minister Alexander Novak also said, on Friday, that the reduction of the oil demand for 2020 is expected to stand around 9-10 million barrels per day (BPD).

It’s worth mentioning that the US moves to punish Chinese technologies and diplomats via various sanctions have repeatedly irritated Beijing. Recently, Global Times used harsh words to defy the Trump administrations’ blacklisting of SMIC.

Even so, the US dollar remains on the front foot while extending the pullback from a 28-month low. The greenback seems to cheer the recent recovery in the American statistics and hopes of breaking the stimulus deadlock.

While the aforementioned catalysts can keep exerting downside pressure on oil prices, Labor Day Holiday in American may restrict the market moves. However, China’s August month trade numbers may offer intermediate trading opportunities to the market players.

Technical analysis

With a clear break below 100-day EMA, currently around $39.73, oil prices are vulnerable to further downside towards the June 25 low of $37.17.


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