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  • Downed by global economic growth fears and USD comeback.
  • OPEC supply cuts, US sanctions to offer respite ahead of US rigs count data?

Having failed another attempt to hold above the 60 psychological barrier earlier today, WTI (oil futures on NYMEX) bears returned to markets with full vigor, now extending the corrective slide to test the 59 handle.

The black gold came under renewed selling pressure in the European session after the manufacturing sector activity in the Euro area economies witnessed deeper downturn, reigniting concerns over global economic slowdown and the resultant impact on oil demand.  

Further, the sell-off was accentuated by a sharp rebound in the US dollar versus its major peers, triggered by a sell-off in EUR/USD on bearish macro news. The USD index now trades +0.22% higher at 96.71, having quickly reversed a dip to 96.57. A stronger greenback makes the USD-denominated oil more expensive for foreign buyers.

However, the losses may remain limited by increased expectations of a potential supply deficit in Q1, in the wake of the OPEC output cuts and the US sanctions on Iran and Venezuela. Looking ahead, the focus remains on the trade developments and US supply-side scenario, as reflected by the rigs count data due to be published later today at 1700 GMT.

WTI Technical Levels