WTI/USD – Crude Slide Continues as Oversupply Concerns Continue

US crude has dropped sharply on Monday, continuing the downward trend seen late last week. In the North American session, WTI/USD futures are trading at $43.19. Brent crude is trading at $44.80, as the Brent premium stands at $1.59. It’s a quiet start to the trading week, with no US releases on the schedule. On Tuesday, there are two key releases, CB Consumer Confidence and New Home Sales.

Crude prices continue to slide. WTI/USD has plunged 4.9% since Wednesday, dropping close to the $43 level. US crude inventory reports continue to point to declines week after week, but crude prices haven’t rebounded due to the oversupply of crude. Drilling activity in the US is on the upswing, as the number of US drilling rigs continues to increase. This is raising concerns that higher production levels in the US will exacerbate supply levels and push down crude prices even further. In late June, US crude broke above the $50 level, but has since dropped sharply, losing more than 12 percent in that time.

Central banks remain in the spotlight, and this week it’s the turn of the Federal Reserve. Last week ,the ECB followed the cue of the BoE and maintained interest rates at a flat of 0.00%. The Fed meets for a policy meeting on July 27 but is unlikely to announce a rate hike at that time. However, with the US posting some solid numbers in the past few weeks, speculation has risen that the bank could raise rates before the end of the year. Another rate hike will be data-dependent, so if key indicators beat expectations, the likelihood of a rate hike will continue to increase. Still, the Fed will be hesitant to make a move if inflation remains stuck at very low levels, well short of the Fed’s target of around 2 percent.

WTI/USD Fundamentals

Monday (July 25)

  • There are no releases on Monday

*Key events are in bold

*All release times are EDT

WTI/USD for Monday, July 25, 2016

WTI/USD July 25 at 11:35 EDT

Open: 44.28 High: 44.37 Low: 43.19 Close: 43.21

WTI USD Technical

S3 S2 S1 R1 R2 R3
30.55 35.25 39.32 43.45 46.69 50.13
  • WTI/USD was flat in the Asian session. The pair posted small losses in the European session and this has continued in North American session.
  • 39.32 is providing support
  • 43.45 is fluid and was tested in resistance earlier in the day. It could see further action in the North American session

Further levels in both directions:

  • Below: 39.32, 35.25 and 30.55
  • Above: 43.45, 46.69, 50.13 and 53.50

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.