WTI bears seek a break and close below $50bbls
- The focus is on supply and demand and with the second volume of the trade war negotiation saga kicking off.
- Bears can target for a break below the 50 handle opens the Nov 2018 lows at 49.39.
A barrel of oil, in terms of WTI, is hugging the midpoint of the $52 handle but is under pressure following the loss of the $54 handle yesterday as the supply side case gathers pace.
On a spot basis, WTI is down -0.16% whereby prices travelled from high of $53.26 to a low of $51.79 overnight before stabilising into Asia on the 52handle. WTI crude contract for November delivery was losing 39 cents, or 0.7%, to $52.36 a barrel on the New York Mercantile Exchange.
The focus is on supply and demand and with the second volume of the trade war negotiation saga kicking off this week as Chinese and US trade negotiators are set to meet, the sentiment has turned sour again while the US administration tightens the screw heading into the talks. The US was announcing the blacklisting of Chinese technology firms — importantly, by citing human rights violations against minorities as a reason for the ban - Not a good welcome mat for the Chinese delegation arriving later this week, who incidentally, have been reported by The Global Times to be cutting the visit short by a day.
All ears to the ground for OPEC sentiment
Therefore, it is OPEC to the rescue, but there are doubts that enough can be done on the supply side to curb the demand sentiment or lack thereof.
"While the OPEC+ group of producers are likely staying the course with their production curtailment agreement until at least the end of Q1 next year, especially Saudi amid the potential Aramco IPO and Iran/Venezuela amid sanctions and economic turmoil, it is increasingly unlikely the cartel will be able to deliver the required cuts quickly enough to prevent a loosening of conditions next year," analysts at TD Securities argued.
"There are concerns that Saudi Arabia could have difficulty persuading allies to deepen their curtailments when the cartel meets in December. When the supply side of the equation is the concern, OPEC policy has proven to be successful, but the cartel's effort may prove fruitless when demand is the issue, which raises major concerns for the energy market."
WTI levels
First key upside target will come as the 21-DMA first which is located around 55 the figure. the 50 and 200 DMAs come thereafter as bulls head towards the 57 handle. Bears on the other hand, can target for a break below the 50 handle opens the Nov 2018 lows at 49.39 which are guarding that 46.90 level before the18th Dec lows at 45.77 that guard the Dec double bottom lows below 42.50.