WTI oil dives to $38.00 on COVID-19 fears and rising stocks

• WTI futures drop more than 3% on the day to prices near $38.00.
• Fears of a second COVID19 wave are dampening oil prices.
• Rising US oil stocks have increased negative pressure on prices.

Front-month WTI futures have dropped more than 3% so far today, reaching lows near $38. Investor's concerns about the increasing coronavirus infections and rising US oil stocks are hurting oil futures.

Oil prices fall on coronavirus fears and higher US stocks

The price of US West Texas Intermediate barrel has retreated from Tuesday’s highs at $41.50. The increase of infections reported in various US states, Latin America and China have boosted concerns about a reintroduction of lockdowns that would cripple economic recovery and plunge oil demand.

Furthermore, the increase in US oil stocks has added negative pressure on prices. According to the latest report by the US Energy Information Administration oil stocks increased by 1.4 million barrels in the week of June 19, following a 1.2 million-barrel increase in the previous week.

WTI oil testing support at 38.35

On the downside, immediate support lies at $38.35 (June 19 low). If prices continue their decline, the next targets might be at $37.05/10 (Jun 17 / intra-day level) and then probably at $36.30 (Intra-day level). On the upside, the pair should return above previous lows at $38.90/00 to ease negative pressure, and above here, $40.00 psychological level before session highs at 40.50.

WTI key levels to watch