- Broad USD strength, bearish EIA data knocks-off oil prices to $ 67 mark.
- Downside targets at $ 65.50-65 still remain in play.
Having consolidated in the upper band of the $ 67 handle in the Asian trades, WTI (oil futures on NYMEX) came under aggressive selling pressure in Europe, with the bears now looking to test the 67 levels.
The sharp 50 cents fall seen in the black gold over the last hour can be mainly attributed to a solid comeback staged by the US dollar against its main peers, as trade tensions between the US and China get heated up following some bold statements released by China’s Foreign Ministry.
In times of market unrest and uncertainty, investors prefer to seek safety in the world’s reserve currency, the USD. A stronger greenback makes the US dollar-denominated oil more expensive to the holders in foreign currencies.
More so, the sentiment around the barrel of WTI remains undermined amid an unexpected build in the US crude stockpiles and rising US production levels. The US Energy Information Administration (EIA) said on Wednesday, the US crude production had reached 11 million barrels per day (bpd) for the first time. Meanwhile, the US crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.
In the day ahead, the commodity will continue to get influenced by the US dollar trades, as attention turns towards the OPEC-JMMC meetings scheduled tomorrow for fresh direction.
WTI Technical Levels
Denis Joeli Fatiaki, Chief Market Analyst at Leo Prime, notes, WTI is “starting to drift towards its 500 EMA line and the bottom of the price channel in the four hours price chart. It is critical for Crude prices to remain above its 500 EMA line and above 67.72 to continue its recovery. Failure to maintain above this vital points might see Crude prices retreat to the previous support at 66.93 and 66.24.”
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