- Escalating US-China trade tensions negates the US crude stockpiles draw
- Risks further correction amid broad-based US dollar demand.
WTI (oil futures on NYMEX) ended its five-day winning streak and returned to the red zone this Thursday, as the latest US tariffs on the Chinese imports intensified trade war fears and dented the sentiment around the higher-yielding oil.
More so, markets fear that the US tariffs on China will weigh on the Chinese economic growth prospects, eventually dampening the demand for oil from the world’s second largest oil consumer.
Amid escalating trade tensions, the optimism led by a drawdown in the US crude stockpiles faded. The US commercial crude oil inventories fell by 5.8 million barrels in the week to Aug. 17 to 408.36 million barrels, the Energy Information Administration (EIA) said in its weekly report.
Further, a pullback in the US dollar versus its main peers following slightly hawkish FOMC minutes and risk-aversion also keeps a check on the upside. A stronger US dollar makes the USD-denominated oil more expensive for the holders in foreign currencies.
The focus now shifts to the US durable goods and rigs count data due tomorrow. In the meantime, the commodity will continue to get influenced by the US dollar dynamics and risk trends.
WTI Technical Levels
Omkar Godbole, FXStreet’s Analyst, noted: “”¦prices could soon test the key resistances lined up at $68.52 (10-day MA) and $69.00 (50-day MA). A close above the 50-day MA would only bolster the already bullish technical setup and would open the doors to re-test of the recent high of $74.67. The bullish view would be invalidated if prices fall back in the falling wedge. Meanwhile, a daily close below the 200-day MA of $62.49 would revive the bearish view.”
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