WTI Slips Beneath $40.00 Ahead Of Inventories - Forex News by FX Leaders

WTI Slips Beneath $40.00 Ahead Of Inventories

Posted Tuesday, October 27, 2020 by
Shain Vernier • 1 min read

With the weekly crude oil inventories reports due out in the next 24 hours, December WTI pricing has slipped beneath $40.00. If you’ve been watching this market, then you know how important $40.00 has been; now, prices are on the decline as fresh coronavirus fears are posing major demand-side questions.

Later today, the API crude oil stocks report will be released to the public. The past several weeks have suggested that demand is growing, placing supplies under pressure. This is a key point moving forward, as this week’s EIA figures are expected to come in negative once again. If so, it will be a major surprise if WTI fails to rally above the $40.00 handle.

Perhaps the largest market underpinning currently in play is the pending U.S. election. Next Tuesday will bring the result, and with it, market volatility. If you are going to be active in the coming seven days, it will be important to stay abreast of the news and manage risk aggressively. For WTI crude oil, extreme swings in pricing are definitely possible.

WTI Holds In Long-Term Bearish Territory

Since 2018, WTI has been in a downtrend. Now, prices are attempting to break above several key resistance levels.

December WTI Crude Oil Futures (CL), Monthly Chart
December WTI Crude Oil Futures (CL), Monthly Chart

Here are the key long-term levels to watch:

  • Resistance(1): Monthly SMA, $49.32
  • Resistance(2): Bollinger MP, $57.11

Overview: The next 24 hours are going to set the tone for November trade in WTI crude oil. If we see another draw on supplies and subsequent rally in WTI, prices may be poised for a pre-Thanksgiving rally. However, weakness below $40.00 is an extremely bearish signal and one that could prompt a deep downturn ahead of the winter months.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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