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WTI capped and trades as a derivative to stocks, targets S1 at $43.90

  • WTI has been trading heavy on Thursday after peaking at 47.15 the prior session, trading as a derivative to stock markets. 
  • Currently, WTI is trading at $45.04, down from $46.86 and above $44.64 the low. 

WTI has been correcting early Dec's downtrend from above 54 the figure where prices dropped to as low as $42.67 on Christmas day. WTI futures have been off more than 40% from their early-October peak. WTI hit a high of $47.15 after the biggest one-day rally in more than two years of which has been faded as stocks lose traction and slide. However, nothing as dramatic as when crude price plunged to a 17-month low on Monday when stock prices suffered their worst-ever Christmas Eve performance. 

The mood was lifted yesterday when there were also reports on Wednesday that a US government delegation is going to travel to Beijing in the week of 7th January to hold trade talks with Chinese officials. This all has lead to the eighteenth biggest single-day gain in the indexes since 1970 (a total sample of nearly 12,800 trading days) as investors picked up oversold prices in thin holiday trade. 

Sentiment flips

However, on Thursday, it would appear that investors remain concerned about the trade dispute between China and the US and a global economic slowdown. A Reuters report that President Donald Trump is considering an executive order to ban US companies from using equipment built by China's Huawei and ZTE sparked up jitters once again and traders were quick to take profits in thin holiday trade - weighing on risk assets such as oil. 

WTI levels

WTI is now below the pivot. RSI land MACDs lean bearish with the price correcting lower and moving below the 21-4hr SMA that meets the 10-4hr SMA, potentially offering some support at this juncture. On a continuation, S1 is located at 43.90, S2 at 41.05 and S3 at 39.42. On the flipside, R1 is located at 48.38, R2 at 50.01 and R3 at 52.86. Bulls need to get back above 51.30, as the 50% level of the 2016 lows to recent peak's range. 

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