Monday, November 23, 2015

WTI drops 2% on oversupply worries, tests $ 41

FXStreet (Mumbai) - The black gold prices faced double whammy on Monday, dropping nearly 2% so far, on the back of persisting supply glut worries and a broadly stronger US dollar.

WTI capped below $ 41.65

Currently, WTI trades 1.90% lower at 41.12, bouncing-off a brief dip below 41 barrier. Oil prices halted the recovery from three-month troughs and slipped back into the downward spiral as global supply surplus woes continue to haunt markets.

Markets also shrugged-off a cut in the number of US rigs for an eleventh week out of 12. The US drillers removed 10 oil rigs in the week ended Nov. 20, the biggest weekly decline since late October, bringing the total rig count down to 564, oil services company Baker Hughes report showed.

Analyst at NH Investment and Securities noted, "The burden of carrying high U.S. crude oil inventories is large. The markets would likely rebound only if they saw a fall in U.S. crude inventories, while declining US crude output and seasonal demand provide some support to oil at low prices."

Add to the negative sentiment around the US oil, the US dollar strengthened to the highest levels since April against its major peers on increased Fed hike chatter. At the moment, the USD index jumps 0.30% to 99.95.

Later today, oil prices will continue to track the broader market sentiment while await Fed’s announcement for further USD moves.

WTI Oil Technical Levels

WTI oil has an immediate resistance which stands at 41.65 (daily high) above which gains could be extended to 42.50 (round number). While to the downside, the immediate support is at 40.22 (Nov 13 Low), below which the prices could drop to 39.86 (Aug 21 Low).
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