- Worries about risking supply prompted fresh selling around WTI on Monday.
- Concerns about rising COVID-19 cases in Europe added to the selling bias.
- The lack of follow-through selling below the $60.00 mark warrants caution.
WTI crude edged lower through the early European session and momentarily slipped below the $60.00 mark in the last hour, albeit quickly recovered a bit thereafter. The commodity was last seen trading around the $60.35 region, down 1.80% for the day.
The commodity witnessed some fresh selling on the first day of a new trading week and eroded a major part of Thursday’s positive move amid concerns about rising supply. The OPEC+ agreed last Thursday to roll back its production cuts between May and July amid signs of a strong US economic rebound.
The announcement coincided with increasing Iranian production. This comes amid worries that the third wave of COVID-19 infections and pandemic-related lockdowns in Europe could hinder the anticipated recovery in the fuel demand, which, in turn, prompted some fresh selling around oil prices.
Apart from this, a mildly positive tone around the US dollar further exerted some pressure on the dollar-denominated commodity, including oil. The USD remained well supported by an upbeat US economic outlook and got an additional boost from a fresh leg up in the US Treasury bond yields.
Despite the negative factors, the commodity, so far, has managed to hold above the key $60.00/barrel mark. This, in turn, warrants some caution for bearish traders and positioning for any further downside amid relatively thin liquidity on the back of the Easter Monday holiday in Europe.
Market participants now look forward to the US economic docket, highlighting the release of ISM Services PMI for a fresh impetus. The data, along with the US bond yields, will influence the USD price dynamics and produce some short-term trading opportunities around crude oil prices.
Technical levels to watch
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