WTI: Bears in control below the 200-W EMA at 61.8% Fibo

  • WTI is on the defensive, travelling between the day's range of $51.60 and $52.72.
  • The 200 weekly EMA which gave way while geopolitics drives price. 

WTI was trading at $51.68, - 0.80%, and travelling between the day's range of $51.60 and $52.72, in the main consolidating the downtrend from the $63.80s which made a double bottom on the 5th and 12th June. The price was on the backfoot while demand dwindles away on geopolitical noise from US-China relations and US-Iran/Middle East relations.

The latest developments in the Middle East is the news that has circulated around Iran's announcement that the nations will break the uranium stockpile limit in 10 days. This is an escalation of poor relations that were already on tenterhooks and a development that comes in the wake of suspected attacks on oil tankers last week in the region.

The announcement indicated Iran’s determination to break from the landmark 2015 accord, which has steadily unravelled since the Trump administration pulled America out of the deal last year and re-imposed tough economic sanctions on Iran, sending its economy into freefall. Last month, Iranian President Hassan Rouhani warned that Iran will enrich its uranium stockpile closer to weapons-grade levels in 60 days if world powers fail to negotiate new terms for the nuclear deal of which the U.S. pulled away from.

"On the geopolitical front the market has decisively taken a "show me the lost barrels" attitude with respect to tensions in the Gulf, following the attack on tankers near the Strait of Hormuz. While Pompeo's remarks were immediately hawkish, a "diplomatic" tone was emphasized which eased fears of an imminent retaliation. While no barrels have been lost of yet, we think that risks to further disruptions are rising, and higher insurance costs should warrant a risk premium associated with crude oil prices," analysts at TD Securities explained. Then, on the flipside, we had the comments from Saudi Energy Minister Falih over the weekend. The comments hinted that the OPEC meeting will be pushed back into the first week of July, although leaving expectations of an extension of the current agreement on the table. 

WTI levels

The price remains below the 200 weekly EMA, balancing on a 61.8% Fibo, which gave way in recent prior sessions and leaves the 14th Jan 50.41 low and then the 26th November lows at 49.44 exposed. On the up-side, a clear break of the 53 handle opens 54.50 and then 55.20 meeting the 20-D EMA.

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