WTI drops to test last week lows, remains vulnerable

• Saudi Arabia to raise output to offset the loss of Iranian barrels.
• Technical outlook for WTI remains bearish and seems vulnerable under $70.
• Price holds above $68.40 and attempts recovery.

WTI (oil futures on NYMEX) dropped to test last week lows after the beginning of the American session but managed to hold on top. As of writing, price was moving off lows, back above $69.00 a barrel, still looking vulnerable.

A stronger US dollar sent WTI to $68.45 (also the Oct 18 low). From the low it bounced to the upside and climbed to $69.30, erasing daily losses. Price continues to consolidate, near 4-week lows.

US sanctions on Iran´s oil sector that were a support to crude oil, will come into effect November 4 and appear to be largely discounted but there is uncertainty about how much oil will be off the market. The bearish short-term pressure on oil prices increased after Saudi Arabia said it plans to increase output to offset the decline in Iranian exports.

WTI Levels to watch

To the downside, the key support level is seen at $68.45; a break lower could clear the way to more losses targeting $67.95, below the next strong support is seen at $67.10. On the upside, resistance could be located at $69.80 followed by $70.00 and $70.50 (Oct 11 low).