- Trade tussles, EIA report and strong greenback disappoint energy buyers.
- Lack of data highlights political plays as the key catalysts.
With the unexpected rise in EIA inventories joining global risk-off and the US Dollar (USD) strength, WTI plummeted on Wednesday. Though, sellers are catching a breath near the key supports as the black gold flashes $51.10 on the chart during early Thursday.
The Energy Information Administration (EIA) recently reported 2.206 million barrels of increase in the US crude oil stocks during the week ended on June 07 versus market consensus of -0.481 million barrels and +6.771 million barrels prior.
Global investors are no longer cheering the US-Mexico deal as trade tussles between the US and China are heating up again with both the sides actively (indirectly) threatening each other.
Huawei is again planning to question the US ban over national security grounds while Chinese media keep terming the US President’s actions as unjust. On the other hand, the US President Donald Trump stands ready to levy fresh tariffs on the dragon nation’s products worth $325 billion if no solution/discussion takes place at the G20.
Despite the aforementioned pessimistic catalysts, the energy benchmark still refrains from declining beneath the early month low and six-month-old ascending trend-line.
While political plays surrounding the trade tensions could keep entertaining global energy traders, lack of oil specific data might trigger the benchmark’s pullback after the recent downturn.
Technical Analysis
An upward sloping trend-line stretched since late-December 2018 and current month low, not to forget the $50.00 psychological magnet, comprises of a broad support-zone between the $51.10 and $50.00. Should prices fail to bounce off and slip beneath $50.00, November 2018 lows around $49.40 and a late-December high near $47.00 could please the bears.
During the quote’s U-turn, three-week-old descending resistance-line at $53.20 could restrict immediate upside, a break of which can question current month high near $54.80.
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