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WTI Crude Holds Near Lows as Trade War, Iran Talks Fuel Market Jitters
Economic
Summary:
WTI remains under pressure as US-China trade frictions, looming supply increases from OPEC+, and progress in Iran nuclear talks dampen investor appetite. Technical setup signals potential for further downside.
Sell
CLOSEDWTI
End Time
60.800
Entry Price
55.000
TP
64.000
SL
57.924 -1.957 -3.27%
1083
Points
Profit
55.000
TP
59.717
CLOSING
60.800
Entry Price
64.000
SL
West Texas Intermediate (WTI) crude oil continues to face significant headwinds, with prices hovering just above a one-and-a-half-week low during Tuesday’s Asian session. Currently trading in a tight range near $61.75 per barrel, WTI has struggled to attract buyers amid escalating global concerns. Mounting uncertainty surrounding the US-China trade war, an expected increase in output from the OPEC+ alliance, and signs of progress in the Iran nuclear deal have all combined to apply broad-based pressure on the commodity.
Market participants are increasingly cautious, with oil bulls notably absent despite a broadly weaker US dollar. The combination of macroeconomic and geopolitical headwinds has cast a shadow over oil’s near-term outlook, with sentiment remaining fragile as investors brace for a potential breakdown below key technical support levels.
At the core of the current bearish sentiment is the persistent uncertainty in US-China trade negotiations. While sporadic statements from both sides hint at potential progress, the lack of a definitive resolution continues to rattle markets. The two economic giants are deeply entrenched in a tit-for-tat tariff war that has already weakened global manufacturing activity and raised fears of a broader economic slowdown. For crude oil, which thrives on robust industrial demand and international trade, the implications are profound.
The threat of demand destruction is real. As the world’s two largest economies engage in prolonged economic sparring, the ripple effects are evident across energy markets. Investors are increasingly pricing in the possibility of a global recession a scenario that would severely curb fuel consumption across industries, transportation, and logistics.
Adding to the demand-side gloom is a re-emergence of supply-side risks. Several members of the OPEC+ alliance are reportedly pushing for a faster pace of production hikes for a second consecutive month in June. The group, which includes both OPEC and its allies led by Russia, had earlier committed to gradually unwind the record output cuts instituted during the pandemic. However, the recent calls to accelerate the process signal growing internal pressure to reclaim market share even at the cost of lower prices.
This shift in tone from OPEC+ coincides with rising optimism around a possible revival of the 2015 Iran nuclear agreement. If the deal materializes, the lifting of US sanctions could pave the way for the return of up to 1 million barrels per day of Iranian crude to global markets. Such an influx, in a market already battling demand-side anxieties, would further tilt the balance toward oversupply.
Combined, these factors paint a troubling picture for crude bulls: while demand expectations are being downgraded, supply forecasts are being revised upwarda classic recipe for lower prices.
Ordinarily, a weaker US dollar would provide some relief to dollar-denominated commodities like oil. However, even the broadly bearish sentiment surrounding the greenback has failed to lift crude prices. This decoupling signals just how pervasive the negative oil sentiment has become—investors are focusing more on fundamental oversupply and demand destruction risks than on currency tailwinds.
The USD's weakness stems from increasing market bets that the Federal Reserve may be nearing the end of its tightening cycle, or potentially even pivoting in the medium term. Still, without a corresponding improvement in risk appetite or macroeconomic indicators, oil markets remain vulnerable to further downside.
Technical Analysis
From a technical perspective, WTI crude is showing signs of further deterioration. Prices are currently testing an overlap resistance near $62.04 a level that previously served as support but now acts as a ceiling. A failure to break above this threshold could trigger renewed selling pressure.
We are eyeing a potential downside extension toward $55.00, which aligns with a swing-low support zone and coincides with the 61.8% Fibonacci retracement level an area that often attracts buying interest in oversold conditions. However, a clean break below this zone could open the door to deeper declines, especially if macro conditions continue to deteriorate.
Brent crude, WTI’s international counterpart, is also exhibiting technical weakness. A double bottom pattern formed during a recent bullish correction has now failed to deliver upside momentum, with prices sinking below the 50-day Exponential Moving Average (EMA50). The breach reinforces the bearish scenario and suggests that further downside may be imminent unless a fundamental catalyst shifts the narrative.
TRADE RECOMMENDATION
SELL WTI
ENTRY PRICE: 60.80
STOP LOSS: 64.00
TAKE PROFIT: 55.00
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