Western Texas Intermediate (WTI), the US crude oil benchmark, remains negative due to low demand fears regarding the crude oil market.
Rumors such as China’s ongoing Covid-19 problems and reports of higher crude supply this week have kept the WTI price constant, below $80.00. As of this writing, WTI trades at approximately $77.46 PB.
Experts have voiced that a daily closing price below $80.00 might pave the door for a re-test of the YTD low.
A similar pattern, if extends beyond a couple of weeks, can trigger investors’ sentiment that will surely be another troublesome outcome for WTI.
Following the stringent liquidity circumstances in the midst of a shorter week due to the US Thanksgiving holiday, investors have shown mixed reactions.
Furthermore, investors have had the opinion that China’s large number of Covid-19 cases will dampen demand for black gold, weighing on the WTI price.
According to news reports, the number of cases rose to roughly 31,987 on Thursday, up from 29,754 on Wednesday.
On Monday, Chinese authorities announced to relaxation of Covid-19 control measures. Nonetheless, as the virus spreads, officials in some areas are already reimposing tougher precautions and demanding lockdowns.
Apart from that, news of the European Union considering imposing a price restriction on Russian oil, ranging from $65 to $70 per barrel, has pushed down oil prices globally.
Additionally, the US Dollar (USD) appreciated 0.36%, on Friday, as the market was surrounded by short-covering speculation.
The Future Outlook of WTI Price
WTI extended its losses throughout the week after reaching a weekly high of $82.35 PB on Tuesday. WTI dropping below $80.00 PB paved the way for additional declines.
And it may hit the November 21 low of $75.30 if fundamental factors posed doubt about oil demand.
It’s worth mentioning, that the Relative Strength Index (RSI) continues to decrease, indicating that sellers are buckling up momentum.
Hence, WTI’s instinct to counter the current outcomes seems a bit shallow and downwards, surely a matter of great concern for the overall market and the traders as well.
The first level of support for WTI would be $77.00. But, if the price of WTI falls below $75.30, it will expose the November 21 low of $75.30, which, once cleared, will send it plummeting toward its YTD low of $74.30.
The recovery of the WTI price can face a further hurdle if China has decided to impose the lockdown once more. Shutting down routine business and industrial activities will significantly reduce the demand for crude oil.
Being among the world’s biggest crude oil consumers, China’s Covid worries can really turn the situation upside down.