WTI slips back below foothold on the $60 handle

• WTI sinking below the watermark and psychological 60 handle.
• WTI can break the 20-day moving average and target support and confluence level.

Despite the weakness in the greenback, poor Chinese data negated the recent rally in global stocks and oil prices have been sent down below the 60 handle, capped by prior early May support, as markets finally factor in the likely impact of storm-related production shutdowns in the Gulf of Mexico. China's GDP growth has slumped to its slowest pace in almost three decades, as trade tensions weigh on sentiment and activity. GDP rose by 6.2% year-on-year in 2Q19 as was widely expected. 

"With some 70% of crude output in the Gulf of Mexico shut over the weekend, some producers are expected to resume operations as storm Barry weakens, which should see crude markets return their focus on demand growth once again,"

analysts at TD Securities explained, adding:

"We judge that a rally much beyond $60/bbl for WTI may prove to be difficult to sustain. We continue to favour Brent in relative terms to WTI."

As for futures, the August West Texas Intermediate crude contract fell by 47 cents, or 0.8%, to reach $59.74 a barrel on the New York Mercantile Exchange. The black gold contact was finishing last week with a 4.7% gain. However, considering the pause in tensions between the U.S. and China on tariffs along with production being capped until March of 2020 by the Organization of the Petroleum Exporting Countries and other major producers, including Russia, bulls remain on solid grounds, likely committed to test another run through to higher levels on the 60 handl and above. 

WTI levels

WTI can break the 20-day moving average and target the confluence of the 50 and 200 moving averages of the same period down at 57.90. A break there opens the weekly lows at 56.77, then the 52 handle and then the 14th Jan 50.41 lows. Further lower, the 26th November lows are located at 49.44 as a target. On the upside,  another daily close above 60 would put the bulls on track for 63.79 as the next key target.