WTI corrects further from multi-year tops, slides below $76.00 mark
- WTI witnessed some follow-through selling for the second successive session on Thursday.
- An unexpected rise in US stock turned out to be a key factor that prompted profit-taking.
WTI crude oil extended the previous day's retracement slide from the highest level since November 2014 and witnessed some follow-through selling for the second straight session on Thursday. The downward trajectory dragged spot prices to three-day lows, around the $75.70 region during the early European session.
The overnight corrective pullback followed an unexpected rise in US crude stocks that raised concerns over demand after the recent runaway rally to multi-year highs. The US Energy Department reported on Wednesday that US crude inventories rose by 2.3 million barrels last week as against expectations for a modest dip of 418,000 barrels.
Apart from this, comments from US Energy Secretary Jennifer Granholm further contributed to the commodity's ongoing profit-taking slide. Speaking to the Financial Times, Granholm talked about the possibility that the United States could combat higher prices by either releasing oil from strategic reserves or potentially halting crude exports.
Despite the negative factors, the decline in oil prices, so far, has been modest in wake of the OPEC+ decision earlier this week to keep a cap on crude supplies. OPEC+ was concerned that a fourth global wave of COVID-19 infections could hit the demand recovery and chose to stay with the plan to increase output gradually, shrugging off the international calls to boost production.
Hence, it will be prudent to wait for a strong follow-through selling before confirming that the commodity has topped out in the near term and positioning for any further losses.
Technical levels to watch