WTI oil prices retreated to intraday lows around $71.00 as negative sentiment contributed to weak demand in Europe on Tuesday morning. Hence, oil prices were also less affected by the possible supply crunch caused by Tropical Storm Bret. On Monday night, the US National Hurricane Center expressed concerns that Tropical Storm Bret could strengthen and become a hurricane on Thursday and Friday. It is worth noting that Tropical Storm Bret is heading towards the US Gulf and is likely to make landfall near the oil-rich region. This has certainly raised concerns about an oil supply crunch. The OPEC+ supply cut and comments by Saudi Arabia suggesting further tightening in production have also provided some protection for oil buyers. On the other hand, concerns about a slowdown in the Chinese economy have increased after the People's Bank of China (PBOC) cut the loan prime rate (LPR) by 10 basis points (bps), in line with market expectations. Earlier in the day, leading banks such as Goldman Sachs and JP Morgan revised their growth projections for China downwards, raising concerns about weaker energy demand. This is quite significant considering that China is one of the world’s largest energy consumers. On the other hand, growing concerns about hawkish policies from the US Fed and the ECB have also weighed on the demand outlook for WTI crude oil and have led to a decline in the energy benchmark’s prices of late. In this context, the S&P500 Futures are trading at a modest loss, while the 10-year and 2-year US Treasury yields are hovering near 3.82% and 4.75% respectively at the time of writing, after rising for the previous two consecutive days. However, the US Dollar Index (DXY) is struggling to sustain its latest gains and is hovering around 102.50 levels. Moving forward, concerns about key central banks and risk factors will be on the cards for a clear direction. In technical analysis, the RSI (14) is stable and the bullish MACD signal supports the rising support line in the last one-week timeframe, with the lowest level potentially near $70.35. This could limit the decline in WTI crude oil prices in the short term.

 

 Also Read : WTI Crude Oil Returns Bearish & Loses 14,000 Barrels

 

Warning!

This analysis is based on fundamental and technical views from trusted sources, not advice or invitation. Always remember that this content is intended to enrich the reader's information. Always use independent research first regarding other forex information to be used as a reference in your trading.

 

Get the latest news and articles from GIC Indonesia, you can check on Google News every day to find out the latest updates about the world of forex to crypto. Trading is also on GICTrade using an ECN account to enjoy trading with low spreads starting from zero!