- WTI trades near $55.70 before London open on Tuesday.
- Investors now await signals from the US-China trade deal to escalate supply driven rally.
- $56.80 may challenge the upside while $55.55 can offer nearby support.
WTI trades a bit softer around $55.70 during early Tuesday. The energy benchmark slipped further from fresh 2019 high of $56.30 marked Monday as global investors remain afraid for future fuel demand considering the presently hanging issue of the US-China trade deal. However, OPEC+ supply cuts and the US sanctions on Iran and Venezuela limit the energy benchmark’s downside.
With the US market being closed on Monday due to President’s Day holiday, traders got fewer details on what happened during the five-day trade negotiations at Beijing. The US side delegates, headed by the trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, returned home on Friday. Leaders of both the nations, namely the US President Donald Trump and his Chinese counterpart Xi Jinping, equally praised the progress of talks during the weekend.
On Monday, energy traders took advantage of optimism surrounding a trade deal after the US President Trump signaled possibilities of an extension of March 01 deadline. The move was preceded by an indication from Trump that the US may wait for nearly 60 days before levying fresh tariffs on China after the 90-day deadline expires if the modes are progressive.
It should also be noted that present production-cuts by the Organization of Petroleum Exporting Countries (OPEC) and Russia, jointly called OPEC+, coupled with the US sanctions on Venezuela and Iran, are also playing their roles to please energy Bulls.
During initial Tuesday, Reuters reported that top members of the Trump administration including the US Trade Representative Lighthizer and the Treasury Sec. Mnuchin will gather to discuss what structural changes and import promises China should make to move forward in a trade deal with the US. It was also reported separately that the Chinese Vice Premier Liu He will visit Washington on February 21st and 22nd to hold another round of trade discussion with the US leaders.
In spite of supply-side restrains signal further upside for the energy benchmark, questions over future demand due to the US-China trade deal’s impact on global growth highlights the importance of developments for the buyers.
WTI Technical Analysis
The quote requires successful break of $56.30 in order to extend latest advances to the 100-day simple moving average of $56.80. During the price rise above $56.80, the 61.8% Fibonacci retracement of its early January to February moves, at $57.50, can become buyers’ favorite.
On the downside, high of February 04, neat $55.55, seem nearby strong support as a break of which can recall $54.20 on the chart.
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