Crude Oil Prices Sink with Dow Jones. Will WTI Extend Drop after Support Breakout?

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Crude Oil Prices Sink with Dow Jones. Will WTI Extend Drop after Support Breakout?

WTI crude oil prices are on pace for a fourth week of consecutive losses, which would be the worst losing streak since March 2020. That is when futures briefly dipped below $0 during the global coronavirus outbreak. On Wednesday, the commodity closed at its lowest since early October. The energy sector weakened on Wall Street, tracking the decline in WTI.

The growth-sensitive commodity was left vulnerable to deteriorating risk appetite as the Dow Jones, S&P 500 and Nasdaq 100 all closed in the red. This followed softer US housing starts data, which showed homebuilders delaying new projects amid rising material costs and ongoing labor shortages. Traders flocked into Treasuries, pushing up prices as government bond yields fell.

Meanwhile, crude oil prices might have also been impacted by the virtual summit between the United States and China. Presidents Joe Biden and Xi Jinping discussed releasing strategic petroleum reserves amid soaring oil prices. Prospects of higher future supply likely tamed the commodity, and may leave it vulnerable to near-term losses as more information continues to cross the wires.

 

CRUDE OIL TECHNICAL ANALYSIS

WTI crude oil could be increasingly vulnerable to a turn lower after prices took out the key 78.24 – 79.15 support zone. This has also confirmed a breakout under the long-term 200-period Simple Moving Average (SMA) on the 4-hour chart below. That has exposed the 38.2% Fibonacci retracement at 76.35 towards the midpoint at 73.55.

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