- Sluggish data from major economies continue to weigh on welcome reports from supply-side.
- Friday’s low near $58.30, followed by $58.00 round-figure, could become bears’ immediate targets.
WTI trades near $58.50 during early Asian sessions on Monday. In spite of witnessing consecutive declines in crude stocks and rig counts, doubts over the global economic health continue to weigh on energy prices. Developments surrounding a trade deal between the US and China can offer an immediate catalyst to prices.
The US crude oil stocks change has been printing negative figures during the last two rounds and the weekly outcome of Baker Hughes rig count showed the US oil-rig counts declining for a fifth straight week. Adding to the supply-side deterioration is on-going OPEC+ supply cuts and the US sanctions on Venezuela and Iran.
Despite the aforementioned drawbacks on the supply side favoring an uptick in prices, challenges to buyers have also grown due to doubts over global economic health. Sluggish economics from the global powerhouses like the US, the EU and China continue to raise odds against the energy price rally.
Among recent positives could be Bloomberg report signaling the US-China trade developments. The report says that the US policymakers headed by US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will negotiate the deal in Beijing with their Chinese counterparts on March 28 whereas the other-side led by Vice-Premier Liu He will visit Washington on April 03.
WTI Technical Analysis
FXStreet Analyst Ross J Burland says bears target break of 50% Fibonacci retracement of October – December moves after prices were rejected at the rising wedge’s resistance.
WTI has been rejected at the rising wedges resistance while otherwise, bulls look to the 61.8% Fibo of the Oct 2018 sell-off to late Dec lows at 63.74, reviving prospects for the 70 handle. On the flip side, a break of the 50% Fibo support opens prospects for a break below trend line support and a subsequent drop to 54.50 will open a case for 50.50 as the 23.6% Fibo support structure.