WTI struggles to extend the bounce above $40.50 amid demand concerns

• Cautious market mood, fuel demand worries cap WTI’s bounce.
• Rising coronavirus cases could derail the economic recovery.
• Focus shifts to virus stats, US weekly crude stocks data.

WTI (futures on Nymex) stages a sharp rebound from a dip to a daily low of 40.21 in the European session. The bulls, however, struggle to extend the recovery amid a cautious market mood and rising worries over the fuel demand setback.

The intensifying coronavirus spread across America and Asia-pacific has prompted the re-imposition of the lockdown measures, which is likely to derail the global economic rebound and in turn weigh negatively on the prospects of fuel demand recovery.

Further, the negative US stock futures and jittery European indices also add to the downbeat sentiment around the black gold. The European traders remain cautious amid souring UK-China relations and ahead of the EU meeting on the recovery plan.

Meanwhile, markets shrugged off the news that Saudi Arabia’s King Salman bin Abdulaziz has been admitted to the hospital. The focus now remains on the virus update for any impact on the global market sentiment ahead of the weekly crude supplies report from the US.

WTI technical levels to watch

“An upward sloping trend line from June 15, at $40.00 now, quickly followed by a 21-day EMA level of $39.80, restricts the black gold’s near-term declines. If at all the bears dominate past-$39.80, the monthly bottom around $38.70 and June 25 low near $37.18 could return to the charts. Meanwhile, $41.00 guards the oil price upside ahead of the June month’s top near $41.65,” explains Anil Panchal, FXStreet’s Analyst.

WTI additional levels