WTI: Off daily highs, still above $33.00, as US-China tension looms

WTI drops to $33.45, down 0.6%, while heading into the European session on Monday. The black gold recently benefited from the news suggesting ease of the coronavirus-led restrictions in Japan and New Zealand. In doing so, the energy benchmark recovered from the intraday low of $32.86 to the daily high near $33.84.

However, the US-China tussle, recently over the Hong Kong bill, keeps the US dollar on the front foot against the majority of its rivals, which in turn weigh over the commodities.

Also exerting downside pressure on the oil prices could be the fall in open interest and volume during Friday, as per the data from the CME Group, ahead of the US and the UK holidays on Monday.

Not only New Zealand and Japan, easing the virus-led restrictions in Indian and China’s return to pre-pandemic oil demand also favors the energies.

Amid all these catalysts, the market’s risk-tone sentiment remains mildly positive. The US stocks futures mark near 0.50% gains whereas Asian equities print mixed results by the press time.

Looking forward, a lack of major data/events can keep the energy benchmark mostly dependent on the qualitative catalysts. Herein, US President Donald Trump’s reaction to China’s move towards curbing Hong Kong’s autonomy will be the key to follow.

Technical analysis

An ascending trend line from May 04 around $30.75 becomes near-term key support ahead of $30.00. On the contrary, bulls will target to fill the early-March gap above $36.60/65 if manage to keep the reins beyond the monthly high of $34.74.