WTI trades near $62.00 as downside pressure builds fast
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WTI trades near $62.00 as downside pressure mounts amid Russia-Ukraine peace negotiations.
FUNDAMENTAL OVERVIEW:
- WTI prices declined amid concerns of oversupply following potential ceasefire talks between Russia and Ukraine.
- President Trump mentioned that Ukraine and Russia are set to start immediate ceasefire negotiations, possibly excluding U.S. involvement.
- Additionally, the People’s Bank of China cut its one- and five-year Loan Prime Rates by 10 basis points, bringing them to 3.0% and 3.5%, respectively.
West Texas Intermediate (WTI) oil is trading near $62.00 per barrel early Tuesday in the European session, pulling back after two days of gains. The retreat reflects market concerns over how a potential Russia-Ukraine ceasefire could impact global oil supply.
According to Reuters, US President Donald Trump announced Monday that following a call with Russian President Vladimir Putin, Ukraine and Russia plan to begin immediate ceasefire negotiations, possibly without US involvement. A possible easing of sanctions on Russia may increase its oil exports, adding to an already oversupplied market.
Further weighing on oil prices, Moody’s downgraded the US sovereign credit rating, casting doubt on the economic outlook for the world’s largest oil consumer. Additionally, softer-than-expected industrial production and retail sales data from China, the top oil importer, have intensified bearish pressure.
At its May policy meeting, the People’s Bank of China (PBoC) reduced the one-year and five-year loan prime rates by 10 basis points each, lowering them to 3.0% and 3.5%, respectively. These expected cuts, which set new record lows, are part of Beijing’s wider monetary easing efforts to stimulate a slowing economy amid rising trade tensions. Over the longer term, these measures could help support oil demand.
CRUDE OIL TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Crude Oil is trading within a down channel.
Crude Oil is moving below 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Neutral trend.
Immediate Resistance level: 62.80
Immediate support level: 60.08
HOW TO TRADE CRUDE OIL
After a significant drop, Crude Oil found strong support and rebounded sharply. However, it failed to break through a key resistance level and began to decline. It has now broken immediate support and is currently undergoing a pullback. Further rejection from higher prices could lead to additional downward movement for Crude Oil.