While Friday’s comments from the US President Donald Trump helped trigger WTI recovery, the energy benchmark held the strength amid geopolitical tension surrounding the Middle East as it traded around the 55.5 level before heading back down this morning. Having announced 10% tariffs on China’s goods worth $300 billion, effective from September 01, the US President Trump took a U-turn from previous comments on Friday while saying that the tariffs can be delayed or canceled if China promises to move forward on trade between now and their next scheduled meeting in September. Not only trade news but a fifth consecutive fall in US rig count, as reported by the Baker Hughes, also favored the black gold’s pullback from the lows. During the weekend, Iran again grabbed market attention by seizing an oil tanker and seven sailors on the charges of “smuggling”. The same is third such seizure by Iranian revolutionary guards in a month and flashes warnings to global oil players using the Persian Gulf as a route.
Crude oil prices surged during Friday’s session challenging the $55.73 resistance level before heading back down this morning towards the $55 support level. The momentum is still bearish even if it exited the oversold zone and the price is breaking below the near support level. We will be focusing on the downside with the lower trend line presented on the chart being in the highlight. Meanwhile, the $54.42 support level will be the level to watch.
Support: 54.42 / 53.89
Resistance: 55.06/ 55.73