- WTI futures bounce up from $34.50 area and approach $36 area.
- Fears of a second COVID-19 wave are hurting risk appetite and weighing on oil prices.
- Longer-term, WTI has pulled back nearly 15% from June highs at $40.40.
Front-month WTI futures are ticking up above $35 after having retreated to $34.50 lows on Monday’s early US session. The overall trend, however, remains negative with upside attempts limited below $36.00 so far.
Fresh COVID-19 fears hit crude prices
Growing concerns about a second wave of coronavirus infections and its potential damage for the economic recovery are weighing market sentiment on Monday. Recent reports pointing out to a fresh wave of infections in China and the increasing number of cases reported in the US have spooked investors, pushing oil prices further down.
Furthermore, British Petroleum has downgraded its 30-year oil price forecast by 27%, increasing negative pressure on oil prices. Experts from BP affirm that Brent crude prices will average $55 per barrel between 2021 and 2050, down from their previous forecasts of around $75 per barrel.
Macroeconomic data has failed to brighten the sentiment either. China’s industrial output grew below expectations in May and the German economic minister warned that the country’s economic output will continue contracting in the second quarter. These figures increase the evidence of a long recovery from the COVID-19 shutdown.
Oil prices nearly 15% down from June’s peak
From a longer-term perspective, WTI prices remain heading south within a clear downtrend channel from the June 8 peak at $40.40, having reached $34.38 low so far. This is a nearly 15% correction of its rally from Mid-April lows.
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