U.S. West Texas Intermediate crude oil futures are edging lower early Monday as rising COVID-19 cases in the United States and other places fueled worries about another round of demand destruction. The heightened fears are being generated as some countries resume partial lockdowns that could hurt fuel demand.
Global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.
At 04:42 GMT, August WTI crude oil is trading $37.67, down $0.82 or -2.13%.
Sellers are also responding to other factors including poor refining margins, high oil inventories and the resumption of U.S. production. Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the potentially bearish closing price reversal top on June 23.
A trade through $34.66 will change the main trend to down, while a move through $41.63 will negate the closing price reversal top and signal a resumption of the uptrend.
The minor trend is down. This is also generating the downside momentum. A trade through $37.08 will reaffirm the downtrend. A move through $39.35 will change the minor trend to up.
A series of retracement levels is helping to generate the recent choppy, two-sided trade. This type of trading is likely to continue until buyers take out $41.56 or $35.45 with conviction.
On the upside, potential resistance levels come in at $38.15, $39.36 and $41.56.
On the downside, potential support levels are at $37.50, $36.63 and $35.45.
Based on the early price action, the direction of the August WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the 50% levels at $38.15 and $37.50.
A bearish tone could develop on a sustained move under $37.50. This could trigger a labored break with potential targets coming in at $37.08, $36.63 and $35.45.
Look for an upside bias to develop on a sustained move over $38.15. This could trigger a surge into the resistance cluster at $39.35 to $39.36. The latter is a potential trigger point for an acceleration into the next potential resistance cluster at $41.56 to $41.63.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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