WTI turns south to break below $37 mark, down over 1%

• WTI sold-off into Libyan oil supply news and Iraq price cuts.
• Bulls shrug-off likely Iran’s avenge on the US, Gulf of Mexico storms news.  
• Eyes on weekly US crude stocks data and Thursday’s OPEC+ meeting.

Following a brief consolidative stint near-daily highs above $37.50, WTI (futures on Nymex) came under heavy selling pressure in the European session on Monday.

The US oil shaved-off gains and fell over 1% to breach the $37 mark, now wavering around the latter. Oil ended last week losing about 5.50%, registering the second straight weekly loss.

Earlier in the Asian session, the black gold bounced-off a dip to $37.04 on a Politico report, citing that Iran is reportedly plotting to kill a US ambassador, response to the killing of Qassim Soleimani.

Further, the sentiment around the WTI barrel was lifted by news that a tropical storm in the Gulf of Mexico caused a production shutdown. The National Hurricane Center (NHC) issued an alert that Tropical Storm Sally is forecast to become a hurricane on Monday.

However, the sellers returned in Europe along with demand concerns, as the coronavirus crisis continue to affect the global economic recovery.

Additionally, odds of additional Libyan oil supplies hitting the market downed the commodity. This comes after Libyan Commander Khalifa Haftar said that he is committed to the full reopening of the energy sector no later than September.

Meanwhile, broad-based US dollar weakness is doing little to slow down the declines in USD-sensitive oil. Attention now turns towards the weekly crude supplies report from the US ahead of Thursday’s critical OPEC and its allies (OPEC+) meeting.

WTI technical levels to watch

“…a descending trend line from September 02 and 50-bar SMA, respectively around $38.15 and $39.25, are popping up on the buyers’ radar. Meanwhile, the black gold’s downside break of the $37.55, the previous resistance line from September 08, can recall $37.00 before challenging the monthly low near $36.40,” FXStreet’s Analyst Anil Panchal explained.

WTI additional levels