WTI remains pressured around $42.50 amid bearish OPEC report
- Bearish OPEC report negates optimism over US crude stocks draw.
- Uncertainty over US fiscal stimulus impasse dents mood.
- WTI’s downside likely cushioned by dollar weakness.
Having faced rejection just shy of the 43 mark, WTI (futures on Nymex) turned lower to mid-42s, as the bears fought back control amid downbeat OPEC’s oil demand forecasts.
In its monthly oil market report, the Organization of the Petroleum Exporting Countries (OPEC) said that the 2020 global oil demand is likely to fall by 9.06 million barrels per day (bpd) vs. the expectations of -8.95 million bpd.
Further, tepid risk tone amid growing uncertainty over the timing of the US fiscal stimulus, which is essential to stimulate the economic recovery in the world’s largest economy, continues to weigh on the higher-yielding black gold.
However, the persistent US dollar weakness, amid large bond auction led lower Treasury yields, offers some support to the USD-sensitive oil. A weaker greenback makes the dollar-denominated oil cheaper for foreign buyers.
WTI bulls also benefit from the weekly US crude stocks drawdown, as reported by the Energy Information Administration (EIA) on Wednesday. US crude inventories fell by 4.5 million barrels vs. expectations for a 2.9 million-barrel drop.
The focus now shifts towards the sentiment on the global markets and dollar trades for the next direction on the prices.
WTI technical levels
If at all the buyers manage to cross $43.25, the monthly high near $43.65 and February month’s low near $44.00 will act as additional resistances for them to confront. Alternatively, $42.30 and the channel’s support line near $41.90 precede a 200-HMA level of $41.81 to challenge the commodity bears, FXStreet’s Analyst, Anil Panchal, explained.
WTI additional levels to watch