U.S. West Texas Intermediate oil futures are trading lower for the week, putting the market in a position to post a potentially bearish technical closing price reversal top on the weekly chart. This chart pattern typically leads to the start of a two to three week correction.
Demand Concerns Move to Forefront
Demand concerns are driving the price action this week. Although the OPEC-led production cuts remain supportive, they may not be enough to underpin prices if demand drop substantially.
Putting a lid on crude oil futures are renewed worries over U.S.-China trade relations. The growing concerns were fueled by comments on Thursday from a U.S. trade official who felt the two economic powerhouses were still far away from striking a trade deal despite recent optimistic remarks from the Trump administration, and a report that an upcoming meeting between U.S. President Trump and China’s President Xi Jinping would be pushed into March.
Traders are also responding to another downgrade of a major economic region as well as dovish remarks from the Reserve Bank of Australia.
In the U.S. on Thursday, the crude oil tumbled after White House economic advisor Larry Kudlow said that China and the U.S. were still far away on striking a trade deal. Later in the session, stock weakened further after CNBC reported that the Trump-Xi meeting before the March 2 deadline was “highly unlikely.”
Also contributing to this week’s sell-off…