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  • The barrel of WTI reverts recent gains and trades near $56.60.
  • Crude oil weaker after Chines PMI came in below estimates.
  • US crude oil supplies dropped by almost 8.5M barrels.

Prices of the barrel of WTI are trading on the defensive in in sub-$57.00 levels amidst a renewed downbeat sentiment among traders.

WTI softer on Chinese data

The sentiment around crude oil prices has deteriorated somewhat today after Chinese manufacturing PMI surprised to the downside in February, extending the downtrend into the contraction territory. The softer prints from the Chinese factory activity fuelled speculations that a slowdown in the Asian economy could be in the offing.

In addition, and also weighing on crude oil prices, optimism around an eventual deal in the US-China trade dispute has been losing traction as of late, particularly after recent comments from US Trade Representative R.Lighthizer, who talked down the proximity of such a deal.

Looking ahead, flash US Q4 GDP figures will dictate the sentiment in the global markets in the near term, while driller Baker Hughes will publish its weekly report on oil rig count on Friday.

What to look for around WTI

Monday’s attack from President Trump to the OPEC’s policy of intervening in oil prices could open the door for extra effervescence in the coming days, including the probable resurrection of an anti-trust law in the US. The likeliness of a slowdown in the Chinese economy and lack of significant progress on the US-China trade front carries the potential to undermine further rallies in crude oil prices. On the flip side, the so-called ‘Saudi Put’ plus the ongoing OPEC+ agreement to curb production should stay supportive of prices, along with current US sanctions on Iranian and Venezuelan oil exports.

WTI significant levels

At the moment the barrel of WTI is losing 0.13% at $56.65 and a breach of $55.56 (100-day SMA) would open the door for $54.87 (21-day SMA) and finally $54.73 (low Feb.26). On the other hand, the initial up barrier aligns at $57.45 (2019 high Feb.22) seconded by $58.00 (high Nov.16 2018) and then $59.63 (50% Fibo retracement of the October-December drop).