West Texas Intermediate (WTI) drops sharply more than 1.50% on Monday, after failing to crack a key technical resistance level, along with demand woes sponsored by China’s property crisis. Despite rising tensions in the Middle East, traders are bracing for the US Federal Reserve (Fed) decision to keep the US Dollar strong. At the time of writing, WTI exchanges hands at $76.90.
The real estate crisis in China might be about to get worse as a Hong Kong court ordered the liquidation of property giant China Evergrande Group. Sources cited by Reuters said, “The situation in China is the biggest headwind to the whole market; that is why the market keeps backing off from the war risk premium.”
Oil prices failed to gain traction following an attack to a Russian oil facility on Monday on the Slavneft-YANOS refinery in the city of Yaroslavl.
In the meantime, the restrictiveness of global central banks keeps Oil prices slightly depressed as the Federal Reserve (Fed) and the Bank of England (BoE) take center stage during the week. Both central banks are expected to keep rates unchanged, though the former is underpinning the Greenback (USD).
The US Dollar Index (DXY), which tracks the performance of six currencies against the buck, is up 0.14%, at 103.61, a headwind for US Dollar denominated assets.
All in all, Oil traders are looking forward to the American Petroleum Institute (API) stockpiles report in the US on Tuesday, ahead of the US Energy Information Administration (EIA) on Wednesday.
According to a Reuters poll, US crude Oil and distillates are expected to have reduced last week, while gasoline inventoried were seen rising.
With WTI’s failing to crack the 100-day moving average (DMA) at $79.37, sellers piled in a comeback as Oil prices were dragged below the 200-DMA at $77.44, exacerbating the drop below $77.00 per barrel. A daily close below the latter will expose the $76.00 figure, followed by the 50-DMA at $73.54. Further downside is seen at $73.00. Conversely if buyers lift the price above $77.00, a test fo the 200-DMA is on the cards.