WTI dives 2 percent to test $ 62.00 on mounting US-China trade war fears

WTI dives 2 percent to test $ 62.00 on mounting trade war fears

• Sold-off into escalating US-China trade war concerns.
• Bears eyeing a break below 100-DMA at $ 61.94 ahead of EIA report.

After yesterday’s temporary reversal, the selling interest in WTI (oil futures on NYMEX) regained momentum in the European session this Wednesday, as intensifying trade war fears between the US and China weigh heavily on the risk assets such as oil. China’s announcing of the reciprocal tariffs on 106 US products showed the country’s aggressive stance with regard to the trade relations with the US.

Moreover, the sentiment around the black gold also remains dampened by expectations that the US crude inventories will show a build when the Energy Information Administration (EIA) releases its weekly US crude supplies report at 1430 GMT. This comes after the US American Petroleum Institute (API) crude supplies report showed a massive increase of 5.3 million barrels for the week ended March 23.

Looking ahead, the barrel of WTI will continue to get influenced by the ongoing US-China trade war worries and the US supply-side scenario.

WTI Technicals

Slobodan Drvenica at Windsor Brokers, noted: “Fresh weakness fully retraced Tuesday’s recovery after oil price peaked at $63.84, boosted by surprise drop of oil stocks (API report showed 3.2 million barrels draw in crude inventories against the forecasted build of 1.7 million barrels). Oil price maintains negative sentiment, boosted by increasing Russian oil output and holds in a downtrend from $66.53 (26 Mar peak). Fresh bears broke through 30SMA ($62.80) and pressure pivotal support at $62.56 (Fibo 61.8% of $60.11/$66.53, break of which would generate a strong bearish signal.”