- WTI holds on to recovery gains, near July-end top, after breaking multi-month old falling trend-line.
- Geopolitical tensions between the US and the Middle East continue while Saudi Arabia’s intact support for production cuts favors the bulls.
- Fitch challenges energy buyers by slashing the US, China and the EU growth forecasts.
With the US continues to remain at loggerheads with the Arab nations, coupled with no doubts over the OPEC+ production cut, WTI takes the bids near $58.00 during the Asian session on Tuesday.
The energy benchmark recently benefited from the US-Iran and the US-Turkey tussles while Saudi Arabia’s confirmation that sacking of Energy Minister won’t derail their production cut commitments to the alliance including Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers including Russia (known as OPEC+) added strength to the energy buyers.
It should also be noted that the optimism surrounding the US-China trade talks, North Korea’s extended missile tests and the US Dollar (USD) weakness offered additional support to the oil bulls.
On the contrary, global rating agency Fitch recently renewed trade war fears by downsizing the US, China and the EU growth forecasts for 2019 and 2020.
Investors will now keep an eye over Russia’s Energy Minister’s meeting with Saudi Prince Abdelaziz, followed by the American Petroleum Institute’s (API) weekly crude oil stock report for the US. The API inventory number last grew 0.401 million barrels for the week ended on August 30.
Technical Analysis
Given the black gold’s sustained break of nearly four-month-old falling trend-line, also rising past-100-day simple moving average (DMA), prices can escalate the north-run towards July-end top to $58.80 ahead of challenging the July month high near $61.00. Alternatively, a daily closing below 100-DMA level of $57.40 will negate the breakout and trigger fresh pullback targeting 38.2% Fibonacci retracement near $56.60.
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