WTI Crude Oil Trading

1. Hopes of US-China trade resolution, weaker US dollar remain oil-supportive.
2. All eyes on the US CPI and rigs count data for further trading momentum.

WTI (oil futures on NYMEX) climbed more than a dollar from the Asian lows of 52.14, having hit fresh five-week tops at 53.31 before receding slightly to near 53.10 levels. It’s worth noting that the black gold is on track to book the second straight weekly gain, having risen nearly 10% so far this week.
The sentiment around the barrel of WTI remains buoyed amid increased odds of a US-China trade resolution, especially after the US Treasury Secretary Mnuchin noted that the Chinese Vice Premier Liu will visit the US end-of this month for further negotiations. China is the world’s second largest oil consumer after the US.
Meanwhile, falling Iranian crude exports combined with the OPEC supply cuts underway offer further impetus to the ongoing bullish momentum in oil prices. Sources: Iran's crude exports stay subdued in January despite waivers - Reuters
Further, broad-based US dollar weakness amid risk-on trades and dovish Fedspeak also add to the upside in the commodity. However, markets remain cautious amid looming oversupply worries, especially after the EIA report showed swelling US fuel stocks and record high output levels.
Attention now turns towards the US CPI report and Bakers Hughes oil rigs count data due later in the NA session for fresh near-term trading opportunities.

1. Weakening China imports and exports trigger risk-off, drag oil prices lower.
2. But losses appear capped amid a surge in Chinese oil exports and USD softness.

The bears fought back control and knocked-off WTI (oil futures on NYMEX) back below the 51 handle, as a sharp drop in exports and imports in the world’s no. 2 oil consumer, China, dented investors' appetite towards the higher-yielding/ risk assets such as oil.

Disappointing Chinese trade figures heightened the global economic slowdown fears and led to a broader market sell-off, with the major European indices down nearly 1%.

However, the bulls manage to find some respite from a sharp jump in the Chinese crude imports for the month of December while a broad-based US dollar weakness also helps cushion the downside in the USD-denominated oil.

Further, a drop in the US oil rigs count also keeps the losses limited. The US energy services firm Baker Hughes said in a weekly report last Friday, the US drillers cut four oil rigs in the week to Jan. 11, bringing the total count down to 873.

Markets now look forward to the sentiment on the Wall Street for fresh trading impetus while the weekly crude supplies report from the US will offer the next direction on the prices.

1. WTI has found demand at a key support level at the 23.6% fibo retracement of the Oct decline.
2. WTI is currently trading at 52.04, down from a high of 52.47 and up from a low of 50.87.

WTI is stablising in the downside correction of the recent recovery highs at 53.54. The EIA, (The U.S. Energy Information Administration ), cut its 2019 Brent oil-price forecast and issued its 2020 views. The EIA cut its previous 2019 price forecast by 0.8% for Brent crude to $60.52 a barrel and said it expects to see an average of $64.76 in 2020, keeping its forecast for West Texas Intermediate crude prices at $54.19 for 2019. The EIA expects to see an average of $60.76 in 2020 and also forecast U.S. crude output of 12.07 million barrels a day this year. Output next year is expected to average 12.86 million barrels a day.

Elsewhere, there has been some positive sentiment from China. China is countering a run of weak data and has been promising a number of stimulus measures. This support risky asset classes such as oil. The suggested measures have included larger tax cuts and sufficient monetary support. China's PBoC and the MoF alongside a stable CNY overnight (currently at a 5-month high) is supporting risk appetite and the price of oil.

Much more needed to convince markets
Analysts at TD Securities pointed out, however, that "we will need to see concrete signs of action before markets are convinced, but the comments are in the right direction," analysts at TD Securities argued, "In particular, they are focusing on areas of pressure such as autos, weakness in private companies as well as highlighting prospects for major and broad-based tax cuts." However, the trade data earlier this week were poorer-than expected and have been underlining worries that the country’s economy is locked in a downturn which should be a warning to the bulls.

WTI levels
Support levels: 51.30 50.26 49.59
Resistance levels: 52.41 53.01 53.68

From a technical standpoint, that daily doji had started to play out this week but the downside has been held up at the 23.6% fibo retracement around 50.50. However, a break there should encourage additional speculative shorts as the bulls step aside. Bears can hunt down the psychological 50 figure and then 48.20 as a key confluence support area to target.

1. U.S. crude oil refinery inputs averaged 17.2 million barrels per day during the week ending January 11, 2019.
2. Gasoline production increased last week, averaging 9.6 million barrels per day.
3. Distillate fuel production decreased last week, averaging 5.4 million barrels per day.
4. U.S. commercial crude oil inventories decreased by 2.7 million barrels from the previous week.
5. Total products supplied over the last four-week period averaged 20.1 million barrels per day, down by 2.1% from the same period last year.

1. US-China trade war end???
2. increased US oil production (11,9 M bpd) (+ 2,4 M bpd compared to jan 2018)
3. OPEC+ member Russia to accelerate cuts
4. OPEC extraordinary meeting april
5. China increase oil import dec 2018

1. Prices of WTI inch higher and surpass the $54.00 mark.
2. OPEC+ cuts sustaining the bullish sentiment.
3. US oil rig count down by 21 rigs during last week.

Prices of the barrel of the West Texas Intermediate have started the week on a positive fashion, advancing to fresh YTD peaks beyond the $54.00 mark albeit losing some impetus afterwards.

WTI upside bolstered by China data

Prices of the WTI area inching higher on Monday in response to rising optimism following recent Chinese data releases.

In fact, the Chinese economy expanded at an annualized 6.4% during the fourth quarter 2018, while Industrial Production expanded 5.7% from a year earlier in December and Retail Sales grew 8.2% YoY.

In addition, recent data also noted a higher oil demand in China, which is somewhat offsetting the slowdown in the economy, all rendering in a better mood around traders.

Furthermore, OPEC+ planned cuts continue to support the upside momentum in prices while a sharp drop in US oil rig count (21) during last week is also adding to the broad-based optimism.

1. Prices of the WTI are trading on the defensive below the $53.00 mark.
2. Prospects of lower global growth weigh on crude oil.\
3. API, EIA report coming up next on Wednesday and Thursday.

Prices of the WTI are giving away part of their recent up move to fresh YTD peaks beyond the $54.00 mark per barrel and slip back to the $52.70 region, where sits the 100-hour SMA.

WTI hurt by global growth forecasts

Prices of the barrel of the American benchmark for the sweet light crude oil have come under some renewed downside pressure in response to recent signs of a global slowdown, particularly stemming from Chinese fundamentals.

Reinforcing that view, IMF’s Chief C.Largarde said on Monday that the think tank revised lower its forecasts for global growth to 3.5% (from 3.7%), the lowest level in the last three years.
Moving forward, the weekly report on US crude oil supplies by the API is due tomorrow followed by the DoE’s report on Thursday.

What to look for around WTI

The ongoing OPEC+ agreement to curb oil output remains the almost exclusive source of support for prices, along with omnipresent supply concerns in Libya and Venezuela while current US sanctions limiting Iranian oil exports and a downtrend in US drilling activity also sustain the optimism around prices. However, the evident slowdown in the Chinese economy coupled with fresh projections of a deceleration in global growth has a direct impact on the demand for crude oil and carries the potential to undermine any serious bullish attempts.

WTI significant levels

At the moment the barrel of WTI is losing 2.13% at $52.72 facing the next support at $52.65 (low Jan.22) seconded by $50.34 (low Jan.14) and then $49.18 (21-day SMA). On the flip side, a breakout of $54.22 (2019 high Jan.21) would aim for $54.48 (monthly high Dec.4) and finally $58.00 (high Nov.18 2018).