Oil dropped on weak demand

Oil dropped on weak demand

2021-01-22 • Updated

Why did oil dip?

Long story short, oil fell below $52.00 because investors expect a weaker oil demand amid rising Covid-19 infections and new lockdowns. Besides, the overall risk-off market sentiment drove the safe-haven US dollar higher and thereby lowered the appeal of commodities priced in dollars.

On the virus front, Hong Kong pledged for the first time to lock down tens of thousands of citizens to control the virus spread. The new wave of restrictions in China will curb oil demand in the world's biggest oil importer.

However, we must admit that while oil has been dipping this week, it has been still trading close to the highest levels in almost a year. Expectations for a big stimulus package from Biden will support the risk-on sentiment in the near term. Besides, Saudi Arabia’s output cuts will help to avoid oversupply.

What’s next?

Crude oil inventories at 18:00 MT time will impact oil prices. The better-than-expected reading will drive the commodity up, the worse-than-expected – down. The forecast is the drop by 1.2 million barrels.

Technical tips

WTI oil has approached the support of $51.60, which it has failed to cross a few times. Elsewhere, the price moved below the lower line of Bollinger Bands, signaling the soon reverse to the upside. The move above the 50-period moving average of $52.70 will push the price higher to $53.80. On the flip side, if it drops below $51.60, the way down to the next support of $51.00 will be open.

To trade WT oil with FBS you need WTI-21H, which expires on February 19.

WTI_OilH4.png

TRADE NOW

Similar

Oil: Russia-Ukraine Crisis Could Boost Oil Prices
Oil: Russia-Ukraine Crisis Could Boost Oil Prices

Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...

WTI and Brent React To a Key Pivot
WTI and Brent React To a Key Pivot

Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...

Latest news

USD: Powell Speaks on Cutting Interest Rates
USD: Powell Speaks on Cutting Interest Rates

Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera