- Trade wars heat up and weigh on the global demand outlook for the price of oil.
- WTI price is now below the 20-daily moving average, testing the 53 handle.
The price of West Texas Intermediate oil has been falling in the open today on a spot basis. This follows October West Texas Intermediate crude’s drop on Friday on the New York Mercantile Exchange where it lost $1.18, or 2.1%, to settle at $54.17 a barrel – (For the week, the front-month contract saw a loss of 1.2%). The theme, of course, is trade wars and the impact of oil is going to weigh on the Loonie as well.
The reports that China’s tariff list included a 5% levy on imports of U.S. oil and amplifying concerns about the global economy and demand prospects will likely keep the black gold under pressure. On Friday, prices were also weighed on heavily by the trade war escalation, falling on a spot basis from $55.59 to a low of $53.27, ending the day down 2.73%. In the open in Asia today, the pric of oil is down a further 1.36% at the time of writing, printing a fresh low of $53.05.
Trade wars heat up
“China announced retaliatory tariffs on USD75bn of US imports on Friday, effective 1 September and 15 December. US autos will have a 25% tariff imposed from 15 December, and other tariffs are 5-10%,” analysts at ANZ Bank explained:
“The US retaliated, with President Trump stating that the 10% levy on USD300bn of Chinese goods would be raised to 15% and the existing 25% levy on USD250bn of Chinese goods would lift to 30%. Trump urged US companies to pull out of China and produce in the US. The latest escalation suggests that uncertainty will continue to weigh on global trade, industrial production, and investment in the months ahead, with no sign of a resolution anytime soon.”
Pressured below the moving averages on the 4-hour time frames, namely the 20, 50 and 200, the price is now below the 20-daily moving average and is testing the bull’ commitment just above 43 the figure. Trading deeper below the downside trendline, bears can focus on the downside and having taken out the trendline support, bears can now target a drop to the 52 handle and the 61.8% Fibo at 51.70 on the wide.