WTI stays on the defensive below $37.00 despite risk-on mood
by Pablo Piovano- Crude oil trades with losses and drops below the $37.00 mark.
- Prices of WTI ignore the better tone in the risk complex and the weak dollar.
- API, EIA reports next of relevance along with the FOMC meeting.
Prices of the barrel of the West Texas Intermediate have started the week on the negative footing in the sub-$37.00 region.
WTI weak on demand jitters
The barrel of WTI has resumed the downside at the beginning of the week, always amidst rising concerns over the demand for crude oil in the current context of the unremitting advance of the coronavirus pandemic.
Monday’s pullback in prices of the American benchmark for the sweet light crude oil has been also supported by new forecasts from the OPEC. In fact, the oil cartel now sees oil demand shrinking by nearly 10 mbpd to levels just above 90 mbpd during this year. The OPEC has, additionally, revised lower its demand growth forecast for 2021.
The downside in prices, however, could be somewhat limited in light of the advance of the tropical storm Sally, expected to morph into a class 2 hurricane and hit the New Orleans area.
From the speculative community, net longs in crude oil retreated to the lowest level since early April during the week ended on September 8, according to the latest CFTC report. In fact, traders commenced to reduce their long exposure in oil in light of growing coronavirus fears and the impact on the demand.
Later in the week, the usual reports on US crude oil supplies by the API and the EIA are due on Tuesday and Wednesday, respectively, ahead of the OPEC virtual meeting on Thursday.
WTI significant levels
At the moment the barrel of WTI is losing 0.17% at $37.23 and a breach of $36.15 (monthly low Sep.8) would aim for $34.38 (low Jun.15) and finally $30.73 (low May 22). On the flip side, the next hurdle is located at $40.56 (200-day SMA) seconded by $43.75 (monthly high Aug.26) and finally $48.64 (monthly high Mar.3).