FxWirePro: WTI to decline towards $44.5 as hurricane Harvey continues disruption

As the torrential rain continues in Texas and Hurricane Harvey batters coast line, the oil market around the world is feeling the heat. One of the biggest victims in the market has been North American WTI benchmark, which has declined steadily this week to reach the lowest since July. WTI is currently trading at $46.3 per barrel.

Southwest Texas, which has been hit the hardest is home to large U.S. refineries that operates on WTI crude. According to report, the storm has taken down refinery capacity of as much as 2.3 million barrels per day. Exxon Mobil, Royal Dutch Shell, Phillips66 are among many names which have closed their refineries. Bears are battering WTI as crude oil remain landlocked in the United States as Houston port has remained closed. With rains continuing and water levels forecasted to rise, we expect the sellers to keep ramming the WTI benchmark and push it to test support around $44.5 per barrel area. A momentum selling might even push prices to as low as $43.5 area.

However, we are maintaining our bullish outlook as the disruption would finally prove to be temporary and WTI would return to the usual trajectory. We have forecasted WTI to reach $56 per barrel. We do not see price dipping below $42 per barrel, however, due to this extraordinary situation, stop loss for the bull call should be maintained around $38 per barrel.