WTI: Trade war, macro pessimism weigh over upbeat API data, geopolitical tension

Despite higher than the prior draw of the API inventories and geopolitical tension surrounding Iran, WTI fails to extend recent recovery as fears of global economic slowdown and the US-China trade war weigh over the oil prices. The black gold trades near $55.50 during early Asian session on Wednesday.

In its Crude Oil Stocks report for the week ended on August 23, the American Petroleum Institute (API) says that a surprise 11.1 million barrels of decline was witnessed in the US inventories versus the previous draw of 3.5 million barrels.

Another price positive factor is the Wall Street Journal’s news report mentioning that Iran’s Iran’s President Hassan Rouhani rejected the possibility of meeting with President Trump as long as the U.S. sanctioned his country. The report came one day after Reuters triggered speculations of peace talks between the US and Iran.

Furthermore, the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries and non-cartel oil producers (OPEC+) noted on Tuesday that the compliance to the oil output cut deal stood at 159% in July, compared to 137 percent in June. The press release also mentions the committee’s expectations of significant oil stocks draws in the second half of 2019.

Challenging the bulls is the US-China trade war that again troubled investors after the US President’s call to have received a good call from Beijing got no validation from the other part. Also adding the downside pressure is the macro pessimism on the back of the US two-year and 10-year yield curve inversion.

Traders will now focus on Crude Oil Stocks Change report from the Energy Information Administration (EIA) for the week ended on August 23 while also keeping an eye over trade/political headlines.

Technical Analysis

While 50-day exponential moving average (EMA) at $56.10 acts as immediate upside barrier, two downward sloping trend-line from July 15 and 31 respectively offers tough resistance confluence around $56.30/50. Meanwhile, a downside break of 21-day EMA can recall mid-month low near $53.80 ahead of highlighting weekly bottoms surrounding $53.00.