WTI consolidates the bounce above $33 mark amid intensifying US-China tensions

WTI off the highs but manages to stay above 33.00
Demand hopes, OPEC+ cuts offset by rising US-China worries.
Broad dollar strength keeps US oil’s upside in check.

Dhwani Mehta FXStreet

WTI (July futures on Nymex) is defending minor bids on the 33 level after having failed several attempts to take out stiff resistances aligned near the 33.70 region earlier this Monday.

The US oil staged a solid comeback in the Asian session and hit a daily high at 33.76 before losing the upside momentum. Since then the price has entered a consolidative mode, as the US dollar dynamics and risk sentiment continue to play out.

At the time of writing, WTI trades 0.33% higher at 33.40, with the upside capped by strong US dollar gains, as escalating US-China tensions boost the haven demand for the buck.

Both the economies are on the loggerheads over the coronavirus mishandling as well as the Hong Kong autonomy issue. A stronger greenback makes the USD-denominated oil expensive for foreign buyers.

Further, the bulls lack vigor, as trading volumes remain light due to a holiday in the UK and US. Therefore, the barrel of WTI keeps its range play intact so far, this European trading.

Despite a pause in the recent move higher, the sentiment remains upbeat for the US oil amid signs of recovery in oil demand, as global economies re-open from the virus-imposed lockdowns. Also, the bulls draw support from the OPEC+ output cut deal that has taken effect and also from falling US crude inventories.

Markets now await the weekly US crude supplies report and fresh updates on the US-China row for the next direction in the prices.

WTI technical levels to watch

With the bulls still in control, the immediate resistance is seen at 33.76 (daily high), above which Friday’s high of 34.00 will be on the buyers’ radar. To the downside, the 32.94 pivot point could offer immediate support, below which the 10-DMA support at 31.38 will be eyed.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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