- Oil fails to benefit from a return of risk appetite in Europe.
- The bounce sold-off into looming US-China trade deal uncertainty.
- All eyes remain on trade developments and US API Crude Stocks data.
WTI (oil futures on NYMEX) saw some aggressive selling over the last hour and hit fresh two-day lows near 56.50, having lost nearly 1% following a bounce above the 57.00 threshold.
The black gold experienced some good two-way businesses so far this Tuesday, as it broke the Asian consolidative mode to the upside and briefly regained the 57 handle on the European open before reversing sharply towards the midpoint of the 56 handle.
The sharp reversal in the commodity over the last hour can be attributed to the persisting doubts over whether the US and China will seal in the preliminary trade agreement. Markets are refraining to buy any bounce amid trade uncertainty while expectations of a rise in the US crude inventories also keep any upside attempts limited.
On Monday, the barrel of WTI slipped farther away from two-month highs near 58.10 region after US-China trade jitters resurfaced and spooked the market mood. CNBC News quoted a Chinese official, as saying that Beijing was pessimistic about prospects for a trade deal, especially after US President Trump said that there was no agreement on rolling back tariffs.
Meanwhile, the US oil continues to draw support from the escalating geopolitical tensions amid reports that armed members of Yemen’s Iran-aligned Houthi movement had seized a vessel towing a South Korean rig at the southern end of the Red Sea over the weekend, per Reuters. Also, the latest news that the Iraqi protests have to the blockage of the Khor al-Zubair commodities port near Basra could also remain oil-supportive.
Markets now eagerly await fresh updates on the US-China trade front while the US weekly Crude Stocks data from the American Petroleum Institute (API) will offer fresh near-term trading impetus.
WTI Levels to watch
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