WTI on the back-foot in huge risk-off session - Biggest decline of the year for S&P 500
- WTI on the backfoot in the face of slower global growth.
- WTI vulnerable below an accumulation of 20, 50 and 200 daily moving averages.
West Texas Intermediate crude on a spot basis dropped -0.85% between a range of $54.25 and $55.59, while, for futures, the September delivery dropped 97 cents, or 1.7%, to end at $54.69 a barrel on the New York Mercantile Exchange. This followed a 1% drop on last week's price action as the tariff tensions build, sapping demand for crude oil as markets anticipate a global slowdown.
News that China will retaliate to the US administration of slapping on additional tariffs on Chinese imports and the Peoples Bank of China's fix in USD/CNY above 6.90 has sparked a huge risk-off rout in global equities, making for the biggest decline of the year for S&P 500. The Dow is on course for its third-worst closing day in history among a sea of red in the benchmarks on today's US session. Elsewhere, markets will look ahead to Tuesday’s monthly Short Term Energy Outlook from the Energy Information Administration while keeping an ar to the ground for anything related to Iran for possibilities of support drawn from tensions in the Middle East on the supply side.
Yuan through 7.0 opens a potential new front in the trade war between the US and China
"China’s move to allow the yuan through 7.0 opens a potential new front in the trade war between the US and China, and will hit risk sentiment in Asia hard, with renewed portfolio outflows likely. And China’s move to stop SOEs buying US agricultural products strikes right at Trump’s support base. Brace for ongoing volatility across all asset markets, including commodities," analysts at ANZ argued.
WTI levels
Technically, the price is holding at a familiar level comprised of past support and resistances, albeit vulnerable below an accumulation of 20, 50 and 200 daily moving averages. While pressure mounts, the bears can target the 50 handle on an escalation of the trade wars, but closer to price action, the 52 handle falls in as a key support area.