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Oil prices dropped on Monday as investors weighed the jump in COVID-19 cases against a probability of a swift recovery in the U.S. economy and a subsequent increase in demand. While lower demand worries have been a concern for months, supply jumped into the picture late last week after OPEC and its allies agreed to taper their agreed-upon production cuts.
Brent crude was down 26 cents, or 0.60%, at $42.88 a barrel, and the Crude oil WTI was off by 28 cents, or 0.69%, at $40.47 a barrel, at the time of writing.
The fuel demand has recovered from a 30% drop in April after countries around the world imposed strict lockdowns; usage is still below pre-pandemic levels. U.S. retail gasoline demand is falling again as infections are on the rise.
More than 14.5 million people have been infected by the novel coronavirus globally and more than 604,000 have died of COVID-19, the disease caused by the pathogen. This may force countries to reinstitute lockdown measures that will slow economic growth and curb energy demand.
Japan’s oil imports fell 14.7 percent in June from the same month a year earlier, official figures showed on Monday. The drop was not as pronounced as in May when they fell 25%, year on year.
Still, exports from the world’s third-largest economy slumped by a double-digit decline for the fourth month in a row as the coronavirus pandemic took a heavy toll on global demand.
In the U.S., energy drillers cut the number of oil and natural gas rigs operating to a record for an 11th week in a row, data released on Friday.
On the technical front, the RSI is at 56.44% and suggests that the market can move in an upward direction. The current price is trading below 5days moving average and is trading above 20days and 50days moving averages. The stochastic is forming a downside crossover.
Overall Bias is Positive and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion—CRUDE OIL—SHORT SELL at $40.45 Take Profit at $39.00 Stop Loss at $41.25