WTI Price Analysis: Oil prices plunge 6% to test upward trending support
- WTI oil plunges 6% to $36, its largest one-day decline since April 27.
- The Fed's negative predictions and concerns of a second COVID-19 wave have crushed oil prices.
- WTI oil prices are testing the last four weeks' upward trending support.
Oil prices are going through a sharp decline on Thursday, with the US benchmark WTI dropping nearly 6% throughout the day. WTI has lost almost $4 in one day, plunging from $39.80 highs on Wednesday, to test the trendline support of the last four weeks’ rally, at $36.
The price of front-month crude oil contracts has been hammered by the sour risk sentiment following the gloomy economic perspectives released by the Fed on Wednesday and growing fears of a second COVID-19 wave in the US that would cripple economic recovery and hit oil demand.
Furthermore, the larger than expected build-up on oil stocks reported by the US Energy Information Administration has added negative pressure on oil. According to the EIA, oil inventories rose by 5.7 million barrels in the week of June 5, against expectations of a 1.45 million decline. Once again, fears of an oil glut, combined with a weak demand have sent prices plummeting.
WTI prices testing the 4-week trendline support
Oil prices have retreated from three-month highs right above $40 to $36.18 lows so far, its largest daily decline since March 27 on the peak of the COVID-19 shutdown. The daily chart, shows WTI oil testing the upward trending support from May 13 low, now around $36. Below that, next potential targets might be the 100-day SMA, at $34.05 and 30.75 (May 22 low)
On the upside, immediate resistance lies at 39.85/00 (Jun 8, 10 highs) and above here, 43.85 (Feb. 28 low), and the 200-dai SMA at 45.65.
