WTI drops to fresh 3-week lows near $ 46.50, high US output weighs

Oil futures on NYMEX is on a declining trend so far this week and meanders near three-week troughs near mid-46s, as concerns over rising US production levels return to the markets and dampen investors’ sentiment.

Moreover, a corrective rally seen in the US dollar versus its main competitors, following yesterday’s sharp sell-off triggered by dovish FOMC minutes, also collaborates to the latest leg down in the USD-sensitive oil. A stronger US dollar makes USD-denominated commodity more expensive for the holders in foreign currencies.

However, the losses appear capped amid a huge drawdown in the US crude stockpiles, as reflected by the EIA weekly inventory report. Focus now shifts towards the US industrial production and Philly Fed manufacturing index for fresh direction on the US dollar, eventually impacting oil prices. At the time of writing, WTI trades -0.20% lower at $ 48.72 while Brent drops -0.30% to $ 51.90.

WTI technical levels 

The resistances are aligned at $ 46.95 (daily top), $ 47.49 (5-DMA), and $ 48.30 (10-DMA) while supports are located at $ 46.50 (psychological levels), $ 45.40 (Jul 24 low), $ 45.00 (round number).