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  • WTI remains pressured after stepping back from $35.90.
  • Fresh risks from the US question the energy benchmark’s recent strength.
  • US President Trump threatens to take all measures to tame the riots.
  • API Weekly Crude Oil Stock, geopolitical headlines will be the key.

WTI drops to $35.60, down 0.35% on a day, amid the early Asian session on Tuesday. In doing so, the energy benchmark defies the previous three-day rise from $31.33 while stepping back from $35.90.

The black gold’s latest declines seem to have taken clues from the riots in the US. The protests against the alleged killing of Minnesota’s George Floyd have turned severe with rioters occupying the area near the White House. As a result, US President Donald Trump announced to take severe measures, if needed use all available resources, military or social, to take the situation under control.

Following the recent escalation in the geopolitical tension, S&P 500 Futures drops 0.55% to 3,036. Also portraying the risk-off sentiment could be Japan’s Nikkei and the US 10-year Treasury yields that defy the previous day’s upbeat performance.

While the geopolitical tension is likely to keep the energy prices under pressure, for now, traders may wait for the updates concerning the US-China relations and weekly private inventory data from the American Petroleum Institute (API) for fresh impulse.

Additionally, updates concerning the Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia, mostly known as OPEC+, will also be the key ahead of this week’s meeting. The global oil producers are so far expected to extend the 9.7 million barrels a day output cut for nearly two months, which in turn could help the oil prices to remain positive. Further, the API data previously marked an increase of 8.731 million barrels into the inventories.

Technical analysis

Given the bulls’ failures to cross a 100-day SMA level of $36.60, oil prices may witness increased downside on the break of a five-week-old support line, currently near $33.75.