​Setback in WTI May Lead a Breach Below $30

WikiFX News (9 Sept) - On Tuesday, the Wall Street equity indices further declined with the Nasdaq losing 4.11% to 10,847.69. Consequently, WTI crude posted its worst day in nearly three months, falling sharply to an intraday low of $36.12 from the level above $39.0.

According to Baker Hughes, a US energy services firm, the changes in the economy and behaviors brought about by the outbreak would hamper the demand for oil and gas. The firm predicted that global activities of oil services would be lower in 2021, compared with that in 2020. Undoubtedly, the main reason driving the rapid decrease in oil prices is the bearish global demand for oil.

More seriously, OPEC+ members are still set to cut production gradually even the outlook for the global oil demand side is worsening, which seems to be the main driver spurring markets to go short on oil. Previously, crude oil has sent a signal of downside as Saudi Arabia has cut prices for Asia and the United States twice in a row. Therefore, questions have been raised on Saudi Arabia and Russia about their resolve to stabilize oil prices as leaders of OPEC+.

As for investors, eyes may turn to China's CPI y/y rate of change in August as well as API's weekly crude inventories to be released early this Thursday, which is expected to affect oil prices.

According to the daily chart, oil prices have approached around $34.50 with high possibility to gain some support in this area. From the long-term view, oil prices may tend to test the support below $30 in the medium term after suffering a slump from the price war between Saudi Arabia and Russia.

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Chart: Trend of WTI Crude