WTI bears are in town below a critical dynamic counter trendline


  • WTI bears are taking charge in a counter-trend and to below dynamic support. 
  • Covid spread fears and lockdowns are weighing on the energy complex. 

The price of oil is down on Wednesday in the same fashion that we have seen over the past four days as the coronavirus remains a concern for the outlook for the energy complex amidst a strong US dollar. 

WTI crude is down by some 1.6% and fell from a high of $67.47 to a low of $65.29.

We have seen several days of weakness due to the rise in infections caused by the Delta variant of the coronavirus both in the United States and worldwide. 

Several countries have re-introduced travel restrictions and air traffic has softened in recent weeks.

On of the largest oil importers, Japan, has announced that the coronavirus state of emergency will continue through September 12 rather than finishing at the end of this month.

The state of emergency for Tokyo, Osaka, Okinawa, and three other regions that began in July will be extended and expanded.

Commerzbank analyst Carsten Fritsch said earlier on the matter that "this is likely to impact fuel demand in Japan, which is the world's fourth-largest oil consumer and importer. It will therefore take longer no doubt for last year's slump in demand to recover."

Meanwhile, helping to stall the decline in prices, the market was helped by a bigger-than-expected drawdown in US crude inventories.

Investors fell 3.2 million barrels last week to 435.5 million barrels, their lowest since January 2020 and more than anticipated.

The rise follows on a 3.8% drop in prices over the past four losing sessions, which came on worries that the wildfire spread of Covid-19 in the United States and Southeast Asia is lowering demand. 

Gasoline stocks, however, rose modestly, which kept the market from moving up given ongoing worries about coronavirus. 

The International Energy Agency last week said it expects oil demand to fall by more than half a million barrels per day in the second half of this year.

As for the US dollar, it continues to outperform for its safe-haven status and the expectation of a taper announcement in the coming weeks.

The U.S. dollar index DXY was up 0.11%, hitting its highest level since April at 93.264 and stable on the low of 93.00. 

Crude prices often move inversely to the dollar because the commodity is priced in dollars; when the US currency falls, it makes oil less expensive for foreign buyers.

WTI technical analysis

Broadly speaking, the price is in a bullish environment while trading above the 200-day smoothed simple moving average. 

However, it has broken dynamic trendline support and is now trading below the 50-day SSMA. 

The downside momentum is strong with daily RSI below 50 following a series of the strongly bearish daily engulfing and outsized candles and lower highs. 

63.60 and 61.60 are the downside structural targets while the price is trading below the dynamic counter trendline. 

WTI

Overview
Today last price 65.37
Today Daily Change -0.91
Today Daily Change % -1.37
Today daily open 66.28
 
Trends
Daily SMA20 69.79
Daily SMA50 71.19
Daily SMA100 67.58
Daily SMA200 60.35
 
Levels
Previous Daily High 67.46
Previous Daily Low 66.09
Previous Weekly High 69.42
Previous Weekly Low 65.03
Previous Monthly High 76.4
Previous Monthly Low 64.99
Daily Fibonacci 38.2% 66.62
Daily Fibonacci 61.8% 66.94
Daily Pivot Point S1 65.76
Daily Pivot Point S2 65.24
Daily Pivot Point S3 64.39
Daily Pivot Point R1 67.13
Daily Pivot Point R2 67.98
Daily Pivot Point R3 68.5

 

 

 

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