WTI corrects last week's rally, slumps below $52
- WTI turns south after closing previous four days higher.
- Rising coronavirus infections weigh heavily on oil prices.
Crude oil prices rose sharply last week after Saudi Arabia announced voluntary output reduction and the Democratic majority in the US Senate ramped up hopes for additional stimulus. The barrel of West Texas Intermediate (WTI) gained more than 9% in the first week of 2021 and touched its highest level since late February at $52.72 on Friday.
However, with the market mood turning sour at the start of the new week, WTI reversed its direction and was last seen losing 1.5% on a daily basis at $51.80.
Energy demand outlook continues to drive oil prices
The surging number of coronavirus infections globally and renewed restrictions, especially in Europe, seems to be reviving concerns over an uneven recovery in energy demand in 2021 despite the vaccine rollout. Additionally, Mainland China reported the largest one day increase in confirmed COVID-19 cases since July on Monday and put additional weight on oil prices.
In the meantime, the broad-based USD strength is allowing the bearish pressure on WTI to remain intact. There won't be any significant macroeconomic data releases from the US in the remainder of the day and the market sentiment is likely to continue to impact oil's performance. At the moment, the S&P 500 Futures are down around 0.5%, suggesting that risk-off flows will remain in control of financial markets in the second half of the day.
Technical levels to watch for