WTI drops -1.50% to test $ 69 amid global economic concerns

• Sold-off into demand concerns, as US-China trade woes weigh on the global economy.
• Technical set up suggest further downside still remains in play.

WTI (oil futures on NYMEX) came under aggressive selling pressure last hour, extending its sell-off from six-day tops of $ 71.25, in the wake of looming concerns over fuel demand growth amid ongoing global economic concerns.

Markets remain wary over a potential slowdown in the fuel demand growth on the back of ongoing US-China trade dispute and Emerging Market (EM) turmoil, despite the latest reports that the US and China are looking to begin a fresh round of trade talks soon.

Meanwhile, the black gold failed to derive any support from the optimistic monthly oil outlook report published by the International Energy Agency (IEA) that warned of higher oil prices in the coming months due to supply risks from the US sanctions on Iran and Venezuelan economic crisis.

The barrel of WTI also looked past the bullish US EIA crude stockpiles data released yesterday that showed, the US crude inventories fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest since February 2015. 

Attention now turns towards the US CPI report for any impact on the USD-sensitive oil while Friday’s US rigs count data could offer the next direction on the prices.

WTI Technical Levels

In the view of Jason Sen at DayTradeIdeas.com, “Holding below minor resistance at 7020/25 targets first support at 6960/50. Longs look risky & a break lower targets 6910/00, perhaps as far as support at 6860/50. We should pause here & a small bounce is possible to 6900/10. However a break below 6840 targets 6780/70. Minor resistance at 7020/30. Gains are likely to be limited but above 7060 allows a retest of important resistance at 7125/40. Try shorts with stops above 7170. A break higher targets 7200/20 & 7230.”