WTI prices correct higher, but remain under pressure below trendline resistance

US Oil prices have switched positive on Monday in the US markets, travelling from a low of $53.00 to a high of $55.24, +0.15% at the time of writing. Markets have found some solace in both sides of the trade war seeming to want to deescalate the tensions in the trade war.  In futures, West Texas Intermediate crude for October delivery climbed 69 cents, or 1.3%, to $54.86 a barrel on the New York Mercantile Exchange.

China’s top trade negotiator, Vice Premier Liu He, came out with a crafted statement saying that Beijing hopes to resolve the trade war through “calm” negotiations and isn’t seeking to escalate tensions, according to Reuters. This helped oil to claw back losses made on Friday and in the open in Asia on the back of China announcing retaliatory tariffs on a range of U.S. goods.

This was prompting a response from Trump on the same day. In a twitter flurry, Trump announced fresh tariff increases, and he did so after the market close which lead to a sell-off in Asia. However, stocks in the US are higher and at the time of writing, the Dow Jones Industrial Average, DJIA, added 250 points, or 0.97%, to 25,876, while the S&P 500 index has 23 points, or 0.97%, to 2,874 and the Nasdaq Composite Index has climbed 90 points, or 1.21%, to 7,555.

"While the global supply narrative has continued to pump out a positive narrative, fears are growing that global demand woes will place a cap on the complex. Chinese crude demand has been a bright spot in the Asian demand profile, suggesting that any weakness in this driver could be particularly painful for crude markets. This suggests that CTAs could be whipsawed for a while longer, as momentum signals prompt the algos to buy high and sell low, with prices largely remaining range-bound,"

analysts at TD Securities explained. 

WTI levels

WTI was pressured below the moving averages on the 4-hour time frames, namely the 20, 50 and 200 and attempts to correct are being met with supply below the 20 4-hour and 20-day moving average. The price is also being rejected at the top the daily wedge. With a focus on the downside and having taken out the trendline support, bears can now target a drop to the 52 handle and the 61.8% Fibo at 51.70 on the wide ahead of the 50 handle and bottom of the wedge.