West Texas Intermediate (WTI), the benchmark for New York-traded crude oil prices, plummeted below the key $69.50 level, crushing $68.70 next target and traded as low as $65.50 during the Monday session, posting its worst day since September 2020.
No sooner had the Saudi oil minister and his 22 colleagues in the global oil production cartel announced output hikes on Sunday for August, crude prices plunge, as the Delta COVID variant threatens global demand.
The group of 23 nations, known as OPEC+, agreed Sunday to increase production by 400,000 barrels each month beginning in August.
The output hike will continue through September 2022, at which point the entirety of the nearly 6 million barrels per day the group is still withholding will be back on the market.
Despite Monday’s downturn, some analysts believe a tight market will continue to support prices.
However, from a technical perspective, exceeding the $68.70 downside target now exposes the region to $62.00 a barrel.
The negative signal from the Moving Average Convergence Divergence (MACD) and the Average Directional Movement Index (ADX) trend indicator bearish trend supports this call.
However, it’s going to be a very volatile period in reaching this target as the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is negative, but oversold.