The West Texas Intermediate was down by more than 4$ during yesterday session breaking below the $55 level after President Trump plan to impose additional 10% tariff on remaining 300 billion Dollars on Chinese imports to the US starting sept 1. The news essentially means that the odds of the Federal Reserve cutting interest rates, again and again, are far greater. After all, Powell said that the reason for the cut was an insurance against the trade wars. On that note and given that interest rates and oil prices have a positive correlation, traders will be watching closely the progression of the trade war in addition to the US employment reports.
Crude oil prices dropped below the $55 handle printing a low of $53.59 per barrel after a total collapse during yesterday’s session before recovering a bit this morning. The price is currently trading just below the $55.06 resistance level and the momentum is still extremely bearish. We will be focusing on the downside with the lower trend line presented on the chart being in the highlight. Meanwhile, the $53.89 support level will be the level to watch.
Support: 54.42 / 53.89
Resistance: 55.06/ 55.73