WTI extends correction to test $72 as oil demand concerns resurface
- WTI on a corrective mode ahead of the July 1 OPEC+ meeting.
- Delta variant fears stoke fuel oil demand concerns, boost the US dollar.
- US Consumer Confidence data and API crude stockpiles eyed.
WTI (futures on Nymex) is extending its corrective downside into the second straight day on Tuesday, as the bears gear up for a test of the $72 mark.
The US oil hit fresh two-and-a-half year highs at $74.45 on Monday before reversing over $2 to $72.05, where it now wavers. The black gold is down 1.15% on the day, undermined by rising fears that the rapid spread of the Delta covid variant globally could derail the economic recovery, in turn, impacting the prospects for fuel demand recovery.
The market mood remains dour amid fears over inflation and covid resurgence, boosting the safe-haven demand for the US dollar while exerting additional downside pressure on WTI. A stronger greenback makes the USD-denominated oil more expensive for foreign buyers.
The weakness in oil prices could be also associated with a profit-taking slide ahead of Thursday’s OPEC and its allies (OPEC+) meeting. The alliance is set to meet in order to discuss easing the oil supply cuts amid the ongoing surge in prices.
In the meantime, oil traders look forward to the US weekly crude stockpiles report due to be published by the American Petroleum Institute (API) on Tuesday.
WTI technical levels to consider