WTI FALLS TO 16-MONTH LOW AS EQUITY MARKETS COLLAPSE
WTI Crude futures are currently trading at $44.60-lower by 1.67% as compared to the previous closing. The contract slid to its lowest level since July 2017 on Monday.
Crude fell today, in line with another decline across world equity markets, which were under pressure due to concerns over a U.S. government shutdown and a worsening world economy.
The price of crude has already dropped by more than 30% so far this quarter to its lowest level since the third quarter of 2017. Crude fell as investors have grown increasingly cautious of the impact to global growth, and crude demand, from escalating trade tensions between the U.S. and China.
Brent crude futures were trading at $53.30-lower by 0.31% as compared to the previous closing.
On the demand front, Sino-U.S. trade tensions and the prospect of a rapid rise in U.S. interest rates have brought world stocks down from this year’s record highs, and ignited concern that crude demand will be insufficient to soak up any excess supply.
On the supply front, the OPEC and its allies agreed earlier this month to cut oil production by 1.2 million barrels per day effective from January. UAE Energy Minister Suhail al-Mazrouei said on Sunday that if the proposed cut fails to balance the market, then OPEC and allies led by Russia will hold an extraordinary meeting.
Adding to supply-side data, reports which are published by the API and the EIA every week, the API is scheduled to report U.S. crude supplies for the week ended 21st Dec. on Wednesday. The API is expected to report a rise of 1.3 million barrels in US crude supplies for the week. Previously, the API reported that U.S. crude supplies rose by 3.45 million barrels for the week ended Dec. 14. The EIA will report US crude inventories for the week ended 21st Dec. on Friday. The market expects that the EIA will report a 0.83 M barrel rise in US crude inventories for the week. Previously, the EIA reported that U.S. crude inventories fell by 0.497 million barrels for the week ended December 14.
On the technical front, the RSI is currently at 27.83% and suggests that the market can move in the downward direction. The current price is below the MA5 (45.79). The %K has crossed the %D from above to the downside at around 45% and suggests that market may move downwards.
Overall Bias is Negative and short-term trades can be initiated with tight Stop Loss and Profit targets.
Trade Suggestion-Limit Sell At 44.75 Take Profit At 44.05 Stop Loss At 45.10