Crude Oil Price Down Again And Trade Tariffs Complicate Things

Summary:
  • On the technical front, WTI oil price has approached the $65.00 neckline on the bearish double-top pattern on the daily chart.

Crude oil price declined for the fourth straight session on Tuesday, with investors taming their appetite on the heels of news of potential supply glut. Benchmark Brent crude was at $67.85 per barrel down by 1.2% in the intraday session. West Texas Intermediate (WTI) was down by 1.40%, trading at $65.36. However, escalating geopolitical tension between Russia and the United States continues to provide support for the commodity.

US President Donald Trump upped his threats against India, stating that he would impose a 100% tariff against the South Asian nation for its adamancy in purchasing Russian oil. Trump has also spoken harshly against China for a similar reason. This setup could potentially strengthen the geopolitical premium on oil price and continue providing support. Also, the hardline stands among the US, China and India could threaten the ongoing trade negotiations and inject a tariff-triggered oil price jump.

On the technical front, WTI oil price has approached the $65.00 neckline on the bearish double-top pattern and a break below that level could signal the onset of an extended downward momentum. In addition, OPEC+ announced earlier last week that it will increase its daily output by 547,000 barrels per day starting in September, and that could strengthen the headwinds against the commodity. Also, economic data will play a critical role, especially in the wake of last week’s weak US jobs data.

Oil Price Prediction

The momentum on WTI crude oil price signals the prevalence of bearish control. That will likely see the momentum shift to the downside below the pivot mark at $65.90 per barrel. In that case, the first support will likely be at $65.10. However, a stronger momentum will break below that level and potentially test $64.60.

On the other hand, going above $65.90 will swing the momentum to favour the buyers. The first resistance will likely be at $66.50. Breaking above that level will invalidate the downside narrative, and the resulting momentum could extend gains to test $67.00.

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