Today in the Asian session, WTI crude oil prices erased the previous session’s gains and dropped 2.02% to $24.24, mainly due to the fears of oversupply and economic crisis caused by the coronavirus outbreak, which combined to cancel out support from supply cuts at some of the world’s top producers. Additionally, the renewed coronavirus fears after the easing of lockdown restrictions globally damaged the expectations of economic recovery, which keeps the oil market heavy. Moreover, the modest upticks in the US dollar are also weighing on oil prices. At press time, WTI crude oil prices are currently trading at 24.05 and consolidating in the range between 23.69 and 24.75.
Despite some US states easing their lockdown measures and the slowdown in demand by the COVID-19 virus slowly recovering, the investor sentiment seems to hurt as reports of new cases of coronavirus in South Korea and Wuhan emerge. China and South Korea are witnessing a second wave of virus, with Mainland China having reported 17 new cases on Monday, with new infections in Wuhan.
On the other hand, the reasons for declining oil prices could also be attributed to the broad-based US dollar modest upticks. At 2:45 AM ET (0645 GMT), the US Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 99.785, up 0.02%. As we are all well aware, the stronger greenback makes the USD-denominated oil expensive for foreign buyers.
Daily Support and Resistance
Pivot Point 25.25
US oil is trading at 25.40 within an ascending triangle pattern which is providing triple top resistance at 26 along with support at 25.10 and 24.10. Meanwhile, a bullish breakout of 26 may lead WTI prices towards 26.75.