- WTI has recovered to $40.35 from Thursday’s low of $38.75.
- Political uncertainty in the US and growth concerns could keep oil under pressure.
West Texas Intermediate (WTI), the North American oil benchmark, is currently trading in green near $40.35 per barrel, having tested the 50-day simple moving average (SMA) support of $38.75 on Thursday.
The relief, however, could be short-lived on account of the potential for serious political uncertainty in the US. President Trump suggested on Thursday that the nation should delay its November Presidential election, as postal voting could lead to fraud and inaccurate results.
Trump’s comments are being viewed as an attack on the integrity of the coming election. After all, the date of the US election is enshrined in the US Constitution and the President cannot delay election without congress.
Apart from political uncertainty, growth concerns could weigh over black gold. The official data released on Thursday showed the US economy, the world’s biggest oil consumer, contracted at a 32.9% annualized rate, the deepest decline in output since the records began in 1947, according to Reuters.
In addition, contango in Brent futures market structure is signaling an immediate oil surplus. “The market will flip back into a mini-supply glut and a swing to the deficit will not happen until December 2020,” Rystad Energy’s Head of Oil Market Research told Reuters.
Put simply, the odds appear stacked in favor of a re-test of the 50-day SMA support.
Technical levels
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