WTI oil: off 7-month lows, trades around $67.00
- US oil prices have recovered to $67.00, possibly due to oversold conditions reported by intraday technical charts.
- The corrective rally could be short-lived on concerns of a slowdown in Chinese energy demand and bearish US oil inventory report.
Currently, the US oil prices are trading at $67.00, having hit a seven-week high of $66.36 yesterday.
The escalating US-China trade tensions and signs of a slowdown in the Chinese energy demand triggered a rising wedge breakdown, sending prices down to $66.36.
The bearish sentiment was also boosted by data from the US Energy Information Administration showing stockpiles had fallen less than expected.
However, the drop to multi-week lows also pushed the relative strength index (RSI) on the hourly chart and 4-hour chart below 30.00 (in oversold territory). As a result, oil is reporting moderate gains in Asia.
The corrective rally could be short-lived as there is evidence that the US oil industry is serving as an alternative source of light, sweet crude, meaning the oil market could stay finely-balanced despite Iran sanctions.