WTI drops sharply to $ 55 mark, OPEC’s bearish report weighs
- Oil lifted by drone attack on Saudi oilfield, risk-on.
- OPEC’s bearish oil market outlook, trade anxiety cap oil’s gains.
- Focus on US Huawei decision, US weekly Crude Stocks data for fresh directives.
WTI (futures on Nymex) came under fresh selling pressure and reversed sharply from three-day highs of $ 55.73 in the European session, as traders weigh in the latest bearish oil market report published by the Organization of the Petroleum Exporting Countries (OPEC) last Friday.
The cartel cut its 20149 global oil demand growth forecast by 40,000 barrels per day (bpd) to 1.10 million bpd, adding that the market would be in slight surplus in 2020.
Moreover, the black gold slipped amid intensifying risk-on market sentiment, as an extension of the recovery in the Treasury yields across the curve and European stocks rally diminished the attractiveness of oil as an alternative higher-yielding asset.
Meanwhile, easing tensions between Iran and the UK after the Iranian tanker was released by British Royal Marines from detention off Gibraltar also seems to have hit the sentiment around the barrel of WTI.
Bulls still supported by Saudi oilfield attack
Despite the latest leg down, the prices continue to derive support from the supply disruption concerns, emanating from a weekend drone attack on a Saudi Arabian oil facility by Yemeni separatists.
A drone attack by Yemen’s Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, as cited by Reuters.
Looking ahead, the US-China trade developments is likely to remain the main catalyst, as markets await the US decision on Huawei’s license extension, which will have a major impact on the risk sentiment. Also, the US weekly Crude Stocks data will be eyed for the near-term direction in oil prices.
WTI Levels to watch