WTI falls toward $73 ahead of weekly API report

• Hurricane Michael over the Gulf of Mexico turns Category 4.
• Escalating concerns over a long-lasting trade conflict between the U.S. and China weigh on market sentiment.
• Coming up: The API’s weekly crude oil stock report.

Crude oil prices gained traction and the barrel of West Texas Intermediate rose above $75 mark as investors continued to price the impact U.S. sanctions on Iranian oil imports on the global supply. Furthermore, the latest reports suggested that Hurricane Michael turned Category four with winds over 145 mph and is now expected to damage the oil output from the Gulf of Mexico.

However, escalating political tensions between the U.S. and China brought back concerns over Chinese demand weakening as a result of a long-lasting trade conflict and weighed on crude oil. The barrel of WTI lost its traction in the last few hours and was last seen down 2%, or $1.5, on the day at $73.15.

Earlier today, in an interview with the Financial Times earlier today, the U.S. Treasury Secretary Steven Mnuchin warned China about currency manipulation.  “As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations. The renminbi has depreciated significantly during the year,” Mnuchin said and added: “We are going to absolutely want to make sure that as part of any trade understanding we come to that currency has to be part of that.”

Additionally, the risk-off  environment as reflected by the sharp drop seen in major equity indexes, put some extra weight on sentiment-sensitive commodities as well. Later in the session, investors will be watching the weekly crude oil report released by the API.

Technical outlook

Crude Oil WTI Technical Analysis: Bearish Head-and-Shoulders pattern enters into play as Black Gold slips to $73.00 a barrel