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  • WTI benefits from the risk-on action in European equities.
  • Concerns over weakening fuel demand could cap the upside.
  • Corrective bounce to extend ahead of US NFP, rigs data?

WTI (futures on Nymex) extended last week’s sell-off and hit a fresh two-month lows of $38.57 in early Asia before recovering $1 to the $39.50 region.

The bulls, however, lacked follow-through, leaving the black gold to consolidate around the 39 level thereafter. At the press time, the US oil is down 1.60% to trade at $39.10.

The renewed selling in the commodity was mainly driven by the news that Saudi Arabia made the deepest monthly crude oil price cuts for its Asian customers.

Meanwhile, the latest China Customs data showed a slowdown in China’s oil imports, which raised demand concerns from the world’s oil importer and exacerbated the pain in the WTI barrel.

Additionally, broad-based US dollar demand following upbeat US labor market report weighed negatively on the black gold. A stronger greenback makes the USD-denominated oil expensive for foreign buyers.

However, the risk-on action in the European equities combined with the holiday-thinned light trading helped cushion the downside in oil prices.

Attention now turns towards the US weekly crude supplies report and sentiment on global markets for fresh trading impetus in the near-term.

WTI technical levels to watch

“The bears can aim for late-June lows near $37.15 during the further weakness while $38.00 may act as immediate support. Alternatively, 100-day and 200-day SMA, $39.75 and $41.83 respectively, will act as nearby strong resistances for the traders to watch in addition to $40.00 round-figures,” FXStreet’s Analysts Anil Panchal explained.

WTI additional levels

 

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