It can neither raise nor fall more!

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WTI falls after the US Inventory report.

By: Ahura Chalki

WTI after touching its highest level of $43.70, in late August, never could touch or pass that level again, why that, and what next?

As I mentioned in my previous analysis as well, Jet fuel is one of the frequently used items of the Oil industry, which is despite slowly growing in South East Asia, still, it’s very limited in most other parts of the world, especially in the EU and US, due to Coronavirus limitations, which is now getting even worse in the second wave of that.

However, it is not all. Industrial use of WTI is the biggest part and PMI data published in the past two months, confirming that while service surveys still disappointing under 50 mostly, manufacturing and industrial surveys have been growing, especially in China and the US, which is a positive sign for market price.

What about Production?

Price is affected by two factors, Supply, and Demand. We had a short review of the demand, and now let’s see shortly what is going on on the supply front.

OPEC+ did not come to the final point, to keep the same supply level or 2Mbpd more supply planed will be overflow to the market, as long as they are not clear about that, pressure on prices will continue.

Libya, back to the game, even though 300Kbpd is not that much in the usual situation, whoever at the current situation, markets count the barrels, one by one, as demand still suffering badly.

And US Shale companies, are back to the game. Last week, for the first time after a sharp decline to 172 U.S. Baker Hughes Oil Rig Count after Coronavirus his in August, we had a record high of 211, the highest number since the beginning of Jun. Another sign of more supply, while buyers are not as quick as sellers.

Technical overview

Currently in booth weekly and daily charts, all technical indicators supporting side movement. $40, where 20 & 50 DMA sitting on each other, as a psychological level is the pivot point, while $39.40, and the $41.60 as 20 and 50 Weekly MA are resistance levels and lower than the current level of $38.50, lower band of side movement on $35.80 is the key support.


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