Even if the US-China trade tussle weighing over the future energy demand, WTI recovers above the $55 level during today’s early session. The reason could be China’s latest statement that it will be forced to take countermeasures if the US deploys intermediate-range missile in Asia. The dragon retaliated after the US withdrew from Intermediate-range Nuclear Forces Treaty while also considering the US Defence Secretary Mark Esper’s comments favoring such tests crossed wires recently. Elsewhere, the Wall Street Journal reports that the US and Britain are forming an international mission to protect shipping through the Strait of Hormuz from Iranian threats. On the other hand, the US is in discussion with Turkey to stop its military expansion around the Syrian border. While trade pessimism creates doubts over the future energy demand, political tension emanating through the Middle East and the global production cut by the Organization of the OPEC and its allies support the prices from declining further.
As expected, Crude prices headed down further during yesterday’s session and reached the lower trend line presented on the chart before bouncing back up after finding the right support. The price is currently trading above the $55.06 support level with the momentum shifting away from the bearish territory. We will be focusing on the recovery with the $56.27 resistance level on our watch.
Support: 55.06/ 54.42
Resistance: 55.73/ 56.27