- WTI spot prices are around 0.90% higher since the open, supported supply risks.
- There is the potential of progress towards a trade deal this week, but unlikely.
Following last week’s rises of around 1.5% for both the U.S. benchmark and Brent, global prices of a barrel of oil were a touch firmer at the start of the week as US-China trade talks are back on the table.
There is the potential of progress towards a trade deal this week as the world’s largest economies and the nation’s trade negotiators get together for their first in-person talks since a G20 truce last month. However, most of the media is reporting the likelihood of such positive prospects to the contrary considering the meting’s past performances that have only highlighted their inability to find common ground.
Businesses are hoping Washington and Beijing can at least detail commitments for “goodwill” gestures and clear the path for future negotiations. However, with the 2020 presidential elections around the corner, even Trump has acknowledged the likelihood that the Chinese will prefer to wait it out to see if they can avoid making a deal altogether with Trump. “I think that China will probably say, ‘let’s wait,'” Trump told reporters in the Oval Office. “When I win, like almost immediately, they’re all going to sign deals.”
Supply concerns stem from the Strait of Hormuz
Nevertheless, for today, with decent summer fundamentals helping to place a floor on crude prices along with ongoing supply concerns stemming from the Strait of Hormuz risk, West Texas Intermediate crude for September on the New York Mercantile Exchange added 25 cents, or 0.4%, to trade at $56.45 a barrel. Spot prices are around 0.90% higher since the open this week having travelled from a low of $55.73 to a high of $56.76bbls.
“Ongoing efforts to secure the navigation for crude tankers in the Strait of Hormuz highlight that the geopolitical situation remains volatile as the US-led coalition deploys additional warships to the region, adding some tail risk to the upside for prices,” analysts at TD Securities explained.
Technically, the price has been capped by the 200-day moving average but a break there will open risk towards 57.40 and the 50-day moving average which guards the 20-week moving average. Bulls will then look to the 60 handle and double top in the 60.80s. On the downside, a break of support located on the rising support line of the channel at 55.80, opens 54.60, (61.8% Fibo.).