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CRUDE OIL OUTLOOK 12.06.20

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The price of a barrel of crude oil is on the back foot during the Asian session and is embarking in a test of the overnight lows at $35.40 in WTI.

At the time of writing, WTI is trading over 1% lower at $35.72 after falling from a high of 436.31 to a low of $35,58.

Risk assets are crumbling amid a risk-off tone across markets as investors fret about the second wave of infections of the coronavirus and a sombre outcome from yesterday's Federal Reserve meeting.

Biggest decline in the S&P 500 since mid-March, losers fit well with second virus wave fears
There was some late news in the day which hammered in the nail for US sentiment that Texas reported its highest one-day increase in COVID-19 case numbers, on Wednesday.

Florida reported the most cases of any seven-day period and California’s hospitalizations are back at their highest since 13 May.

However, crude-oil futures had already dropped Thursday in tandem with a sell-off in US stocks while investors weighed both demand and supply bearish fundamentals.

Supply bearish fundamentals

Stockpiles of the black gold in the US rose by 5.7 million barrels for the week ended June 5, much higher than the market had been expecting. Analysts polled by S&P Global Platts for an average decline of 3.2 million barrels. Inventories of gasoline and distillate fuel also rose.

Over one million barrels of oil will be returning to the market, as Gulf nations curtail their massive voluntary cuts.

IMPORTANT LEVELS FOR 12/06/2020

RESISTANCE 1 – 2816
RESISTANCE 2 – 2840
RESISTANCE 3 – 2870

SUPPORT 1 – 2680
SUPPORT 2 – 2660
SUPPORT 3 – 2642

Thanks!

ProCapitas Market-Pro Team

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