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  • Pres. Trump’s remarks escalate  trade war fears.
  • The risk-off mood continues to weigh on commodities.
  • Weekly EIA report shows a higher-than-expected buildup in crude oil stocks.

Crude oil’s unstoppable fall extended into the late NA session and the barrel of West Texas Intermediate dropped below $71 for the first time since September 21. As of writing, the barrel of WTI was trading at $70.65, down 2.6% on the day.

In an interview with Fox News earlier today, “Chinese lived too well for too long. Our policies hurt China’s economy, and I have a lot more to do,” US President Donald Trump said. Additionally, fears over the U.S. economy losing its momentum amid rising rates continued to weigh on stock markets and didn’t allow risk-sensitive commodities to find any interest from the participants.  

“The demand side of the oil equation is always much more difficult to discern than the more transparent supply side and as equities slide amidst rate increases, the oil market could begin to discount a worst case scenario with regard to oil demand expectations,” Jim Ritterbusch, president of Ritterbusch and Associates, told Reuters on Thursday.

Meanwhile, the weekly stock report published by the EIA showed that crude oil stocks in the U.S. increased by 6 million in the week ending October 5 to put some extra weight on the WTI’s shoulders.

Technical levels to consider

The next support for the WTI could be seen at $70 (psychological level/50-DMA) ahead of $68.35 (Sep. 13 low) and $67.50 (Sep. 11 low). On the upside, resistances are located at $72.40 (20-DMA/daily high), $7370 (Sep. 28 high) and $75 (psychological level/Oct. 10 high).