- WTI struggles for clear direction, risk-off prevails.
- Global production cuts get effective today, US-China trade tussle in focus again.
- Virus keeps weighing on economics.
- Off in China/India also offers a distant signal.
NYMEX WTI Futures for June drops below $19.00 while heading into the European session open on Friday. In doing so, the black gold trims the early-Asian session gains to sub-1.0% as traders turn risk-averse due to the latest US-China tussle. However, the global oil production cut gets activated today and is likely to have stopped the energy benchmark’s drop.
Also questioning the oil price declines could be the open interest and volume details for Thursday from the CME. The figures suggest a hike in open interest by 27.4K contracts with a surge in volume by around 156.4K contracts.
Having raised doubts over the US-China trade deal the previous day, US President Donald Trump shot another salvo in China by threatening to levy tariffs. The Republican leader so far alleged the dragon nation for the coronavirus (COVID-19) outbreak. Recently, Bloomberg came out with the news piece suggesting US President Donald Trump is exploring blocking a government retirement fund from investing in Chinese equities considered a national security risk.
In response, Chinese media seems to forgo their Labor Day holiday and defy any claims while giving names to the Trump administration officials like the “enemy of the humankind”.
Other than the US-China trade drama, fears of a sharp recession in Japan, like World War II, as signaled by the NIKKEI survey, as well as downbeat figures from the Asian nation, keep the energy prices depressed.
Alternatively, the start of the OPEC+ accord to cut 9.7 million barrels of output a day as well as a glimmer of hope from the economic restart seems to question the bears.
Moving on, the weekly Baker Hughes US Oil Rig Count, prior 378, becomes the only oil-centered data to watch during the day. The weekly figures have recently become more important amid wide shutdowns of refineries and huge stockpiles.
Technical analysis
While April 23 high near $18.30 acts as the immediate support, sellers might want to confirm the downside with a clear break below the three-day-old rising trend line, currently around $17.80, to aim for $16.50 and $14.00 during the further downside. It should be noted that any further declines below $14.00 will be the call for $10.00 to return to the charts. On the upside, April 21 high near $22.60 is the immediate resistance to watch beyond $20.00.
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