Oil extends losses for a 4th day. Is there more downside to come?
Fiona Cincotta August 17, 2021 10:22 AM
Oil moves lower for a fourth day as COVID cases and China slowing growth concerns weigh. OPEC+ don't see the need for additional output in H2 beyond that already agreed.
Crude oil extends losses
Crude oil remains under pressure, extending losses for a fourth straight day. Oil trades down around 10% so far this month after gaining around 40% in the first 6 months of the year.
Whilst optimism surrounding the demand outlook drove oil prices higher across the first half of the year concerns over rising delta cases and the slowing economic recovery in China, the world’s second largest consumer of oil. After a stellar first half, oil is looking vulnerable.
Chinese retail sales and industrial production were softer than expected on Monday, highlighting the impact that tougher covid restrictions are having on the Chinese economy. Adding pressure to oil prices, Chinese oil demand slumped 2.3% as daily crude processing in July fell to its lowest level since May 2020.
Covid cases are on the rise in China, where pandemic restrictions have been tightened. Japan is also set to extend its state of emergency widen restrictions to include more prefectures whilst cases were also substantially higher in Australia.
Offering some support to oil prices were comments from OPEC+ yesterday. In response to US President Biden’s call for further output, OPEC+ said that they do not consider that additional supply, above the already agreed increase of 400,000 bpd, was necessary in the second half of the year.
Where next for crude oil prices?
WTI crude oil trades lower for a 4th day. A close below the 100 dma combined with the RSI in negative territory and pointing lower suggests that there could be more downside to come.
Sellers will need to break below the rising trendline support at 65.70 in order to test support at 65.00 the July low. 61.50 the May could also offer support.
On the upside, buyers need to close above the 100 dma and descending trendline resistance which could prove to be a tough nut to crack. Beyond here, 69.30 last week’s high and 70.30 the August 4 high could offer some resistance.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.