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  • WTI trapped between buy/sell side geopolitical fundamentals.
  • WTI is currently trading at 61.39 between a range of 60.67 and 62.47bbls.

The price for a barrel of oil has been caught up between buy and sell side noise in markets and in the case of West Texas Intermediate crude, bulls have been battling against trade war headwinds, albeit finding solace on news that China’s top trade negotiator, Vice Premier Liu He, would visit Washington to continue trade talks on Thursday and Friday despite U.S. Trade Representative Robert Lighthizer confirming an increase tariffs on $200 billion in Chinese goods early Friday, punishing the Chinese for, as Treasury Secretary Steven Mnuchin, along with Lighthizer, told reporters, trying to back away from “some of the language” that had been hammered out in earlier talks – Tariffs on those Chinese goods will rise from 10% to 25% at 12:01 a.m. Eastern time Friday.

In today’s markets, headlines that China is not about to kneel to Trump or be deterred by higher tariffs is setting the stage for a prolonged negotiation well beyond this Friday which uncertainty is likely to keep weighing on prices and commodity markets in general.  

  • ‘Do not even think about it’: Beijing refuses to give in to Trump’s latest threat on trade tariffs – SCMP

At the same time, increasing tensions between the U.S. and Iran and the threat of disruptions to supplies in the Middle East are acting as a buffer for the oil market and with soaring crack spreads as we head towards peak driving season, the downside could be playing out prematurely, or WTI at least.

We come back to good old fashioned data later this week as the next catalyst for some action in the market when the Energy Information Administration is slated to release its weekly report on U.S. petroleum supplies. This report will arrive on Wednesday.  

WTI levels

Technically, the price is respecting prior support and resistance levels while the outlook leans  bearish still while bulls are a far cry still from  the 63 handle. The golden cross is losing conviction as a play at the moment but is so far supporting the renewed supply as the price tries to move lower within the descending channel, paying particular attention to the 200 DMA/50% Fibo. A break there opens prospects for the late Feb/early March highs guarding a break to the early Feb highs at 55.80.  Zooming out, the monthly stick alignment offers a bearish scenario as well, especially on a close towards the Feb 2018 lows at 58.00 as less committed speculative bulls capitulate.