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  • WTI declines from intraday top of $37.66 amid fresh selling.
  • Price positive news concerning OPEC+ and the US-Iran relations fail to overcome Sino-American tension.
  • Market’s pre-NFP trading lull adds to the oil traders’ worries.
  • US employment data, Baker Hughes Oil Rig Counts will decorate the calendar, news/headlines will be the key.

WTI refreshes the intraday low to $37.34 during the initial few minutes of the Tokyo open on Friday. With that, the black gold seems to ignore the upbeat headlines concerning the much-awaited OPEC+ output cut decision and the US-Iran update while taking clues from the tension between the Washington and Beijing.

At the start of the Asian session, Bloomberg came out with the news suggesting that the Organization of the Petroleum Exporting Countries and its allies including Russia, mostly known as OPEC+, will extend the current production cut output after getting a go from Iraq. The news said, “After almost a week of wrangling, OPEC+ leaders Russia and Saudi Arabia clinched a tentative deal with holdout member Iraq, according to a delegate. The agreement — though still to be ratified — means OPEC+ will extend its record production curbs for another month.” 

It should also be noted that Reuters came out with an update indicating the OPEC+ meeting on Saturday. The global oil producers are wrangling over the extension of 9.7 million barrels per day of output cuts as the limit expired on June 01.

Also on the positive side was the US President Donald Trump’s tweet thanking Iran for the release of another detainee and signaling a possible trade deal with the Gulf nation.

On the contrary, the return of the Sino-American tension seems to weigh on the market’s risk-tone sentiment as well as on the commodity prices off-late. Be it US President Donald Trump’s criticism of Beijing’s commitment of Hong Kong or China’s performance on a trade deal, not to forget US Secretary of State Mike Pompeo’s praise to Nasdaq’s move on listing rules for Chinese companies, all of them indicate that Washington-based policymakers remain at loggerheads with the Asian major.

Even so, the US Trade Representative Robert Lighthizer said that he feels “very good” about phase one trade agreement with China.

Amid these catalysts, the US 10-year Treasury yields pause the previous day’s rise with a fall of 1.3 basis points (bps) to 0.807% whereas stocks in Japan and the US stock futures also flash mild losses by the press time.

Moving on, traders might wait for the monthly US employment data for fresh impulse while taking clues from the output related and the Sino-American headlines in the meantime. Furthermore, the weekly release of the Baker Hughes US Oil Rig Count, prior 222, could also direct immediate price action.

Technical analysis

Despite staying above 100-day SMA, at $36.00 now, WTI needs to refresh the monthly top beyond $38.30 to regain the bulls’ confidence in filling the gap below the early-March low of $41.22.