Oil Collapsing On Fears Of Weak Demand
Joe Perry | Mar 18, 2020 14:18
The price of West Texas Intermediate Crude Oil (WTI) is crashing to levels not seen since January of 2002, in the wake of the turmoil after 9/11. Yesterday, WTI had a good chance of reaching support near $25. This was due to the largest demand shock in history, Russia and Saudi Arabia ramping up output, and a surging U.S. dollar. The price today not only took out the 25.00 level, but his exceeded that target by over $3, trading below the $21 handle to a low of $20.34 so far. Price is down over 21% today alone. In the month of March to date, price of WTI Crude oil is down over 51%!
The next level of support is the psychological round number of $20.00, then horizontal support from late 2001/early 2002 early $16.70. Given the nature and amount of the selloff today, its difficult to find any meaningful near-term resistance. The first horizontal level is yesterday’s lows near 26.59, then the lows from March 9 at 27.31. This was the Monday after Saudi Arabia challenged Russia on supply output, saying they would pump as much oil as possible. As one would expect, the RSI is oversold and diverging from price on the daily timeframe and should be ignored for the time being, as the oscillator has been in oversold territory since March 9 and price continues to move lower.
If one wishes to get involved in trading WTI, please make sure to take small positions and use stops. Preservation of your trading account is paramount, and in these volatile markets, price can move against traders very quickly.
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