WTI oil remains at the back foot on Tuesday and establishes below $40 level, as sentiment weakened on news of new restrictions in California due to increased number of infections.
Rising concerns that this would have stronger impact on demand recovery, pressured oil prices, along with signs that producers from OPEC+ group are preparing to increase output from August.
OPEC expects oil demand to rise by record 7 million bpd, on global recovery process from coronavirus crisis, but will remain below the levels in 2019.
The cartel’s optimistic outlook is based on current situation and excludes possible downside risks which could slow the process of recovery and keep oil prices under pressure.
Today’s fall reached low at $39.05 which is above last week’s low at $38.52, but all recent dips managed to close above 20DMA ($39.66), keeping near-term bias with bulls.
Today’s close above 20DMA will add to signals that the risk of deeper fall is limited for now and the near-term action, which holds in extended consolidation after failing to clearly break above $40 mark, biased higher.
Caution on close below 20DMA and extension below rising 30DMA ($38.98) that would weaken near-term structure.
US API crude stocks report is due later today and eyed for fresh signals.
Res: 40.13; 40.74; 41.07; 41.61
Sup: 39.66; 38.98; 38.52; 37.97