- WTI drops even further, sent lower by hard data as well as trade war fears.
- Bears can now target a break of the 50 handle for a look in at the 78.6% Fibo.
The price of a barrel of oil has dropped significantly once again by 3.52%, at the time of writing, marking a low of $50.55 from a high of $53.77. The conditions are set for lower prices all the while that the US and China remain at loggerheads on trade terms which are sapping the speculators desire to buy oil. On hard fundamental data, prices tumbled today due to U.S. inventory data showing an unexpected increase in supplies for last week – The data broke seven straight weeks of declines.
As for futures, West Texas Intermediate crude for September delivery lost $2.28, or 4.3%, at $51.35 a barrel on the New York Mercantile Exchange. This has left the price of a barrel oil down toward levels last seen in early January and the price is now down more than 20% from the April highs.
U.S. crude oil inventories increasing by 2.4 million barrels weighed on prices
Meanwhile, with prices already in bearish territory, the latest U.S. crude oil inventories increasing by 2.4 million barrels from the previous week was not welcomed news for whatever bulls were left in the markets as recorded and supplied by the Energy Information Administration.
“With more than one third of crude demand growth for this year at risk, the positive supply-side narrative has failed to keep a floor on crude’s slump in prices for now,” analysts at TD Securities argued:
“Fundamentally, crude prices are in the crosshairs as the market increasingly expects China to retaliate against US tariffs by placing a levy on US crude imports. At the same time, the fact that the US has found evidence of Chinese tankers loading Iranian crude is fueling fears that China will avoid compliance with Iranian sanctions. In this context, downside momentum signals are strengthening “” with indicators for WTI crude joining those in Brent crude, implying additional selling pressure from CTAs over the coming days. That being said, the recent round of short accumulation in heating oil appears to be running out of steam.”
WTI levels
Technically, the price is below the 61.8%% Fibo of the late Dec to 2019 range and remains smothered below the 50 and 200 daily moving averages. Bears can target below the 50 handle on an escalation of the trade wars. 47.56 coms in as the 78.6% Fibo. On the upside, the 20-D moving average guards the run towards 56.80 and then 60.50.
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