- Renewed nervousness over COVID-19 fueled demand concerns and weighed heavily on oil prices.
- A modest rally in the USD from multi-week lows contributed to the intraday selling bias.
- The commodity managed to find support near the area of $ 60.60, the lowest of last week.
Crude oil WTI it trimmed a portion of its intraday losses to multi-day lows and was last seen trading around the $ 61.30-35 area, shedding 1% on the day.
Black gold sold strongly on the first day of a new trading week, erasing the gains recorded in the last two trading sessions. Investors now appear concerned that rising COVID-19 cases in India and Japan, the world’s third and fourth largest oil importer, will reduce demand for fuel. This turned out to be a key factor that put new downward pressure on the raw material.
Apart from this, the expected increase in supply from OPEC + also acted as a headwind for crude oil prices. OPEC and its allies, known as OPEC +, will discuss production policy at a meeting later this week. Most analysts believe the alliance will go ahead with its decision to ease production restrictions by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and 400,000 bpd in July.
Another factor contributing to the decline was a modest rally in the US dollar from multi-week lows. A stronger USD tends to undermine demand for dollar-denominated commodities, including oil. A good recovery in US Treasury yields extended some support to the dollar. That said, expectations that the Fed will keep rates low for a longer period and weaker macroeconomic data from the United States should limit gains on the dollar.
Despite the negative factors, the commodity managed to find some support near last week’s lows, around the $ 60.60 region, which warrants some caution for bearish traders. This makes it prudent to wait for a strong follow-up sell below the mentioned level before traders begin to position themselves for any further depreciation moves, possibly to challenge the key psychological mark of $ 60.00.
Technical levels
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