WTI outlook: Oil price falls further as sentiment sours on fading trade talks

WTI Oil

 WTI oil holds in red for the second consecutive and fell further on Tuesday as signals stalling US / China trade talks soured the sentiment.

Traders sold oil contracts on growing uncertainty after initial optimism was replaced by fears of escalation of trade war between two world’s biggest oil consumers that would further hurt global oil demand outlook.

The latest OPEC’s decision to further increase oil output from June adds to negative factors, keeping traders in defensive.

Fresh extension lower after recovery from four-year low at $55.12 (Apr 9 low) was repeatedly rejected at the zone of 50% retracement of $72.27/$55.12 bear-leg, broke below Fibo 38.2% retracement of $55.12/$64.85 recovery leg ($61.13).

This generated fresh bearish signal (validation of signal requires daily close below this level) and adds to bearish near-term outlook, as bears eye target at $60.00 (psychological / 50% retracement).

Firm break of $60 trigger to turn near-term picture negative and signal an end of corrective phase.

Conversely, failure to clearly break $61.13 pivot would ease immediate downside risk and keep in play hopes of a healthy correction, although such scenario would require more work at the upside to be validated (lift and close above daily Tenkan-sen at $62.35)

Daily studies are mixed as Tenkan/Kijun-sen are in bearish configuration, but momentum is positive and strengthening, and stochastic at the border of oversold territory.

Markets eye releases of weekly crude stocks reports (API today and EIA on Wednesday) for further signals.

Res: 61.13; 62.35; 62.55; 63.69.
Sup: 60.00; 59.42; 58.84; 57.42.

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