WTI bounces off 8-month old support-line despite trade pessimism, geopolitical tension
- WTI initially weakened as the US and Chinese trade tussle doubts future energy demand.
- Geopolitical tension concerning the Middle East, global production cut and falling inventory levels offer support to prices.
- API Weekly Crude Oil Stock in the spotlight for now.
Even if the US-China trade tussle weighing over the future energy demand, WTI recovers to $55.10 during early Tuesday.
The reason could be China’s latest statement that it will be forced to take countermeasures if the US deploys intermediate-range missile in Asia. The dragon retaliated after the US withdrew from Intermediate-range Nuclear Forces Treaty while also considering the US Defence Secretary Mark Esper’s comments favoring such tests crossed wires recently.
During early-day, the US Treasury termed China as a currency manipulator while Credit Suisse also downgraded Chinese and Hong Kong stocks.
Elsewhere, the Wall Street Journal reports that the US and Britain are forming an international mission to protect shipping through the Strait of Hormuz from Iranian threats. On the other hand, the US is in discussion with Turkey to stop its military expansion around the Syrian border.
While trade pessimism creates doubts over the future energy demand, political tension emanating through the Middle East and the global production cut by the Organization of the Petroleum Exporting Countries (OPEC) and its allies support the prices from declining further.
Traders will now observe industry data for the US Crude Oil Stock for the week ended on August 02. The private inventory reports earlier declined to -6.024 million barrels.
Technical Analysis
An upward sloping trend-line since late-December 2018 limits the immediate downside near $53.60 a break of which can recall June month low surrounding $50.60. Though, 61.8% Fibonacci retracement of its December to April run-up around $51.60 can offer intermediate halt to the plunge. On the contrary, $56.00 and 200-day simple moving average (SMA) level of $57.00 become the key to watch.