WTI slumps to fresh 2-month lows below $66
- Saudi oil minister hints at possible higher oil output.
- Iranian oil minister says sanctions won't stop them from exporting oil.
- Sell-off witnessed in stock markets continue to weigh on commodities.
After closing the previous day with modest losses, crude oil prices came under a heavy selling pressure on Tuesday and the barrel of West Texas Intermediate weakened to its lowest level in two months at $65.70. As of writing, the barrel of WTI was trading at $66.50, losing $3, or 4.3%, on a daily basis.
Earlier today, Saudi Arabia’s Energy Minister Khalid Al-Falih said that it was possible for their output to increase by 1-2 million barrels per day and added that they were ready to meet the market demand if Iran's oil exports were to shrink due to the U.S. sanctions. On the same note, Iran's Oil Minister Bijan Zanganeh told Tasnim news today that exports couldn't be stopped by the sanctions and argued that oil markets would stay volatile amid the U.S. actions.
Additionally, another deep sell-off witnessed in global equity indexes revived the concerns over a weak demand outlook and weighed further on crude oil prices. Commenting on oil's price action, "Concerns about what's going on in the stock markets and the worries about economic growth has spilled over into the oil markets. Investors will be watching closely to see if the increase in Saudi Arabia's output materializes quickly," Gene McGillian, vice president of market research for Tradition Energy in Stamford, Connecticut, told Reuters.
Technical levels to consider
The WTI could face the first technical support at $65.70 (daily low) ahead of $64.50 (Aug. 15 low) and $63.60 (Jun. 18 low). On the upside, resistances align at $68 (Aug. 22 high) and $69.30 (Aug. 24 high) and $70 (psychological level/50-DMA).