WTI confronts immediate resistance-line amid supply crunch signals
- Likely extension of OPEC+ supply cut accord and further political tussles between the US and Iran signal supply crunch.
- The US-China trade tension drags the demand-side outlook.
With the likely extension in global supply cut accord and Iran moving further away from nuclear commitments, WTI confronts short-term descending trend-line as it trades near $52.70 during early Monday.
Saud Arabia’s Energy Minister Khalid al-Falih was recently quoted by the Reuters while speaking to reporters on the sideline of a G20 energy and environment ministerial meeting in Tokyo. Mr. Falih said that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, popularly known as OPEC+, are likely to extend the global supply cut agreement when they meet in July.
Other than that news from Iran and a slight reduction in the weekly release of the US oil rig counts also helped the black gold to remain strong. Iran’s Tasnim news was spotted mentioning the country’s readiness to step further back from the nuclear deal and increase its stocks of enriched uranium and production of heavy water. Moving on, US Baker Hughes weekly release of the US oil rig counts dropped 1 rig to 788 during the week ended on June 14.
Limit the price rally was doubt surrounding the US-China trade deal as the same continues to challenge global economic growth going forward.
While there prevails to direct oil-related data/event for the day to follow, political plays surrounding the US, China and Iran could keep the markets alive. It should also be noted that the US NY Empire State manufacturing index might offer some insights into future energy demand. The forecast suggests the manufacturing gauge weakens to 12.75 from 17.80 prior.
Technical Analysis
Sustained break of a downward sloping trend-line stretched since May 21, at $52.90 now, can trigger the oil benchmark’s fresh upside targeting current month high around $54.80 whereas $55.50 and $56.60 can please buyers then after.
On the downside, an ascending trend-line from December 2018 at $51.10, followed by $50.50 - $50.00 support-zone comprising lows from mid-January, may challenge bears targeting $48.30.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
