- Crude prices remained little changed around $52.30 on early Tuesday.
- Strength of the USD and doubts over US-China trade deal continued challenging supply cut measures and sanctions.
- $51.80 and $51.00 are likely nearby supports contrast to $52.80 and $54.20 that may act as immediate resistances.
Crude began Tuesday’s trading near $52.30 as doubts over US-China trade-deal continued flashing worries over future energy demand. Adding to the WTI weakness was across the board strength of the USD. With this, on-going supply cuts measures taken by the OPEC+ alliance and the US sanctions on Iran and Venezuela failed to please buyers.
Chinese markets re-opened on Monday after a weeklong Lunar New Year holiday period whereas US delegates including trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are in China to discuss over the future trade deal during February 14 and 15.
China, the world’s largest industrial player and energy consumer, has recently been finding it hard to confront the US trade protectionism that has badly affected the nation’s economy. As a result, the US and China decided to agree for a 90-day truce period ending on March 01 to discuss new trade deal and avoid further sanctions on each other’s products. So far, the trade talks haven’t delivered any strong measures and top-tier US leaders, including the President Donald Trump, continued showing their displeasure. On Monday, China showed its part of anger too. The dragon nation seemed unhappy with the US Navy mission disputed South China Sea.
In addition to the bumpy ride on trade, strength of the US Dollar also negatively affects USD denominated commodities. The greenback managed to register noticeable rise on Monday after weaker GDP data from the UK and speculations of weaker global growth drove investors to the risk-safe US Dollar.
While trade talks and stronger USD portrayed the WTI downside, on-going supply cut accord by the OPEC+ alliance and the US sanctions on Venezuela and Iran helped restrict a plunge of energy benchmark. Reuters reported that Suhail Al Mazrouei, the energy minister of the United Arab Emirates, said the oil market should achieve its 1.2 million barrels per day target of supply cut by the first quarter of 2019 rather than earlier expected June.
WTI Technical Analysis
The WTI needs to provide a decisive break under an upward sloping support-line stretched since early January, at $51.80 now, in order to revisit the $51.00 and the $50.30 rest-points.
Alternatively, an immediate descending resistance-line extended since early-month can limit the pair’s nearby upside around $52.80, a break of which might recall $54.20 on the chart.