WTI slumps over 2% amid China’s economic slowdown, unexpected PBoC rate cuts

China’s central bank slashes key lending rates in response to slowing economic recovery, impacting global oil demand outlook.
OPEC+ supply cuts by Saudi Arabia and Russia provide limited support as WTI retreats from YTD highs.
Barclay’s revises China’s GDP forecast downwards, while WTI finds some relief in rising Chinese refinery throughput.

Christian Borjon Valencia FXStreet

Western Texas Intermediate (WTI), the US crude oil benchmark, registers losses of more than 2%, as economic data from China portrays a slowing recovery, while the People’s Bank of China (PBoC) unexpectedly cut rates in key rates to stir the economy after the Covid-19 pandemic. WTI is trading at $80.49 per barrel, down 2.35%.

China’s disappointing Retail Sales and Industrial Production data weigh on crude; PBoC’s rate adjustments add to concerns

The latest round of economic data from China, with Retail Sales coming below estimates and Industrial Production disappointing market participants, spurred a reaction by the PBoC. China’s central bank cut its 7-day lending rates by ten basis points to 2.80% and applied the same measures to the overnight Standing Facility (SLF) rate from 2.75% to 2.65%.

That, alongside the supply cuts implemented by Saudi Arabia and Russia, which are part of the Organization of Petroleum Exporting Countries and its allies (OPEC+), have helped to lend a lifeline to oil’s rally, with prices reversing from year-to-date (YTD) highs.

The investment community’s concern about China’s meeting its 5% growth target in the year would likely pressure WTI’s prices. On Tuesday, Barclay’s cut China’s GDP forecast to 4.5%, citing the ongoing deterioration in the housing market.

Conversely, WTI’s fall was cushioned by the technical support level, and China’s refinery thought, climbing 17.4% in July from a year earlier. WTI traders’ focus shifts to US crude inventories.

WTI Price Analysis: Technical outlook

WTI reversed its course and dipped towards the 20-day Exponential Moving Average (EMA( at $80.47 per barrel, seen as first support, which, if broken, can pave the way for WTI to edge below $80.00. A breach of the latter will expose the August 3 daily low of $78.74, followed by the 200-day EMA at $77.89. Conversely, if WTI holds its ground above $80.00, that would be positive for buyers, which could re-test the year-to-date (YTD) high of $84.85, but firstly they need to break above the April 23 daily high of $83.49.

WTI US OIL

Overview
Today last price	80.19
Today Daily Change	-1.75
Today Daily Change %	-2.14
Today daily open	81.94

Trends
Daily SMA20	80.13
Daily SMA50	74.92
Daily SMA100	74.88
Daily SMA200	76.26

Levels
Previous Daily High	82.6
Previous Daily Low	81.27
Previous Weekly High	84.32
Previous Weekly Low	79.66
Previous Monthly High	81.78
Previous Monthly Low	69.77
Daily Fibonacci 38.2%	81.78
Daily Fibonacci 61.8%	82.09
Daily Pivot Point S1	81.28
Daily Pivot Point S2	80.61
Daily Pivot Point S3	79.95
Daily Pivot Point R1	82.61
Daily Pivot Point R2	83.27
Daily Pivot Point R3	83.94

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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