- WTI knocked-off by record US stocks build, risk-off.
- Grim Fed’s economic outlook dents the market mood.
- Oil headed for the worst daily drop in two weeks.
Fresh bids emerge near the 37.90 region, allowing a tepid bounce in WTI (July futures on Nymex), as it manages to regain the $38 mark amid the downbeat market mood. Despite the minor pullback, the US oil is not out of the wood yet and sheds 3.20% to now trade at 38.30.
The sentiment around the black gold remains undermined by the record build up in the US stockpiles last week, as per the latest data published by the Energy Information Administration (EIA) on Wednesday.
The EIA data showed that the US crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to 538.1 million barrels – a record, as cited by Reuters.
Further, the US Federal Reserve’s (Fed) dour 2020 economic forecasts dampened the appetite for the higher-yielding assets such as oil. The risk-off sentiment persists in Europe, as reflected by the 3% drop in the European equities while the S&P 500 futures tank nearly 2%.
Moreover, the barrel of WTI also remains weighed down by the fears over the second wave of coronavirus likely hitting the US. The US-China tensions also remain a drag on the market mood.
Further, broad risk-aversion ahead of the Federal Reserve (Fed) monetary policy decision also keeps the demand elusive for the higher-yielding oil. Meanwhile, ongoing US-China spat also continues to weigh on the market mood.
Looking ahead, the sentiment on the global markets will continue to remain one of the key drivers behind the oil price action.
WTI technical levels to watch
“The black gold has been largely restricted to a narrow trading range of $37 to $40.50 and the consolidation looks to have taken the shape of a head-and-shoulders pattern on the hourly chart. With the pullback from Wednesday’s high of $40, WTI seems to be charting the right shoulder of the head-and-shoulders pattern. A break below the neckline support at $37.59 would confirm a head-and-shoulders breakdown and create room for a decline to $34.75 (target as per the measured move method). On the higher side, Wednesday’s high of $39.91 is the level to beat for the bulls. A violation there would expose the recent high of $40.50.,” FXStreet’s Analyst Omkar Godbole explained.
WTI additional levels
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