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WTI: Sluggish below $60.00, nears four-week bottom amid mixed geopolitical signals

  • WTI extends losses for the fifth consecutive day.
  • Attempts to curb the US President Trump’s power, reports of airstrikes on the border between Iraq and Syria occupy headlines.
  • Strong US dollar, US-China trade uncertainty adds weight to the black gold.

WTI remains under pressure while taking rounds to $59.60 during the Asian session on Friday. The energy benchmark earlier dropped to the lowest in four weeks amid the de-escalation of the US-Iran war risk. However, recently mixed geopolitical headlines seem to trouble the oil traders.

The US President Donald Trump previously refrained from any immediate military actions, except sanctions, against Iran’s missile attack in Iraq. However, the Republican leader is now using the global back-up, mainly Canada and the UK, which allege Iran for the Ukrainian flight crash.

Though the latest attempt to curb the US leader’s power, as far as the ability to pursue military action against Iran is concerned, seems to further cut the odds of any major geopolitical tension between the US and Iran.

On the other hand, Iran is likely realizing the US power and hence might have readied to co-operate in the investigation for the Ukraine air crash that has few Canadian and British citizens among 176 passengers that died.

Elsewhere, news also crossing wires that Iraq and Syria are at loggerheads near the border. The story is still developing with signals that the attack targets Iranian backed Iraqi militia.

Amid all these market’s risk tone seems to remain mostly unchanged as the US 10-year treasury yields and S&P 500 Futures are near the 0.0% area with 1.86% and 3,278 marks respectively.

It should also be noted that the US dollar’s (USD) broad strength, amid risk-on and upbeat data, offers additional weakness to the black gold. Further, the US President Trump’s indication to sign the phase-two after elections, despite starting the talks right away, also disappoints oil buyers.

Oil traders will now keep closed eyes on the geopolitical/trade headlines while the monthly US employment data can provide directions afterward.

Technical Analysis

Despite bouncing off a 50-day SMA level of $58.80, oil prices stay weak even for short-term unless breaking 21-day SMA, at $60.88 now. Should the quote declines below $58.80, 200-day SMA and an upward sloping trend line since early-October, near $57.85 and $57.65 respectively, can challenge the Bears.

 

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