WTI breaches $ 69 support amid firmer US dollar, easing storm threats

• Firmer US dollar and waning fears over storm Gordon knock-off the prices.
• Eyes $ 68.37 support ahead of the API crude stockpiles data.

WTI (oil futures on NYMEX) extended its corrective slide from eight-week tops of $ 71.39, now breaching the $ 69 level amid a renewed uptick in the US dollar across its major peers.

The latest leg lower in the black gold is mainly driven by increased safe-haven demand for the US currency, as the US-Sino trade tensions escalated amid expectations that the US President Trump would hit China with more tariffs on their imports. A stronger US dollar makes the USD-denominated oil more expensive for the foreign buyers.

The reversal in oil prices from early July highs was triggered by easing threats of the tropical storm Gordon hitting the Gulf of Mexico. Markets were expecting the storm to strengthen to a hurricane, however, it weakened considerable and deviated from the oil fields.

From a broader perspective, the barrel of WTI remains underpinned by the supply disruption threats from Venezuelan falling output and additional US sanctions on Iran. Also, the latest comments from the OPEC’s Secretary General Barkindo could offer some fresh impetus to the bulls in the coming days.

“Robust demand but, more importantly, the disruptions of oil production from two OPEC producers (Venezuela and Angola) as well as the US pulling out of the Iran nuclear agreement are the key factors for this outperformance,” Justin Smirk, Research Analyst at Westpac noted.

In the meantime, the immediate focus shifts to the American Petroleum Institute’s (API), an industry group, weekly fuel supply report due at 2030 GMT.

WTI Technical Levels

According to FXStreet’s Analyst Joshua Gibson, “despite fears of shaky emerging markets, demand remains elevated, and oil traders will be looking to keep prices above the floor at 69.50 until broader market factors push costs higher. WTI found a stiff new high yesterday near 71.50 in the run-up to oil counts, and the long-term bull trend remains intact.”