August 31, 2022 13:07:20
Oil prices continued with their downside momentum on Wednesday. A cautious market mood amid renewed strength in the greenback and lack of buying interest weighs on the prospects of the black gold.
Investors remained concerned about the global economic outlook, hawkish central banks, and COVID-19 curb in China.
U.S West Texas Intermediate (WTI) is down 2.82%, at $89.6 a barrel, extending the 5.37% loss incurred in the previous session.
Since the war break out in Ukraine back six months, the price witnessed a huge round of volatility amid thin trading. Europe is battling the energy crisis that might have a ripple effect in Asia.
The recent data showed signs of stuttering growth in China. The contracting Chinese factory activity in August and slower-than-expected growth in the country’s service sector added to the demand outlook. China is the second largest oil-importing economy after the U.S.
This would mark a third consecutive month for the decline in the price. In the August series, the price could be nearly 10% down.
Talking about the supply side, clashes in Iraq and Libya support the prices, keeping the market on the edge. However, the oil output of the OPEC member remained guarded.
WTI could drop 10% If slips by $85.0
WTI traded in a descending channel since January 10. The price depreciated nearly 38% so far since the beginning of the year.
A crucial support zone plying around $89.0 that extends from February. Further, the price dropped below the 0.61% Fibonacci retracement, indicating the presence of sellers.
A break below $85.0 could trigger another round of selling, the price could test the lower trend line of the channel at $80.0.
However, a daily close above $90.0 could see a quick recovery toward $95.0.
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