Home Gold News Crude Oil Crashes, WTI Futures Fall Near $36 Mark

Crude Oil Crashes, WTI Futures Fall Near $36 Mark

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WTI Crude oil futures have been hammered. The commodity has extended losses well under $40 per barrel as the large scaled demand compression triggered by the ongoing COVID-19 pandemic weighed on the market. The Energy Information Administration or the EIA noted that US average regular gasoline retail price as of the Monday before Labor Day weekend is $2.22 per gallon (gal) this year, the lowest level for this time of year since 2004.

US gasoline prices are relatively low because of continued low demand for gasoline since mid-March, when travel demand fell because of efforts to limit the spread of coronavirus. The average weekly US retail gasoline price increased to more than $2.00/gal by early June and has remained relatively flat through July and August, but prices were still approximately 18% lower than gasoline prices at the same time last year.

Oil market has not been able to hold onto six month highs in last few days even as global equities soared near records and US dollar stayed dismal. WTI Crude currently trades at $36.32 per barrel, down 1.20% on the day after falling around 3.50% yesterday.

Oil Extended its Biggest Decline

Futures in New York fell 1.2%, after plunging 7.6% on Tuesday as Brent crude settled below $40 a barrel for the first time since June 15. Asia’s stalling demand recovery, the end of the U.S. summer-driving season and increased supply from OPEC and its allies signal a bleak short-term outlook for oil prices. Both benchmarks are trading in a pattern known as contango, where the most immediate prices are far below those for supply contracts in later months. Market signals point to more downside risk for oil prices. The difference between the two nearest December contracts — a closely watched gauge of market strength — weakened for both Brent and WTI to their largest contango structure since May, pointing to concerns of oversupply. The combination of coming out of summer peak driving season in the U.S., which is a seasonal factor, has refocused the market’s attention on whether the demand recovery is strong enough – and clearly there are some doubts, as Aramco’s price move has demonstrated. Also weighing on the market is the upcoming maintenance seasons for U.S. refineries, which could cut crude demand by 1.5 million to 2 million barrels per day.

TREND : WEAK BEARISH

Time                                      :           09/09/2020

Pivot                                      :           37.18

Technical View                     :             LONG ABOVE 37.38

Target                                   :            37.58, 38.38, 40.19, 41.24

Technical View                     :             SHORT BELOW 36.98

Target                                   :            36.78, 35.12, 34.17, 32.26

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