WTI erases more than 2% on Thursday, falls below $69

  • IEA warns over the possible negative impact of EM meltdown on global oil demand.
  • US President Trump says they are under no pressure to reach a trade deal with China.

After the weekly EIA report showed a larger-than-expected draw in crude oil stocks in the United States, the barrel of West Texas Intermediate reached its highest level in 10 days above $71 but failed to build on its bullish momentum and reversed its course on Thursday. As of writing, the barrel of WTI was trading at $68.60, losing $1.7, or 2.4%, on the day.

Earlier today, a report published by the International Energy Agency noted that despite the tightening witnessed in the oil market recently, global economic risks could weigh on demand next year. "As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciation versus the U.S. dollar raising the cost of imported energy. In addition, there is a risk to growth from an escalation of trade disputes," the agency said.

In the meantime, concerns over a long-lasting trade war between the United States and China resurfaced today after US President Trump responded to the Wall Street Journal report claiming that the U.S. officials were reaching out to Beijing to organise a new round of trade negotiations. "The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?" Trump tweeted out.

Technical levels to consider

The barrel of WTI could face the first support at $68.40 (20-DMA) ahead of $66.85 (Sep. 7 low) and $65 (psychological level). On the upside, resistances are located at $70 (psychological level), $71.25 (Sep. 12 high) and $72.90 (May 22 high).

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