Crude oil prices are slightly lower on Tuesday. In the North American session, West Texas Intermediate crude oil futures are trading at $55.68, down $0.22 or 0.41%. Brent crude oil futures are trading at $60.82, down $0.27 or 0.44%.
Crude Dips as Trump Talks Tough
After Friday’s plunge, crude prices have stabilized this week. However, crude is under downward pressure on Tuesday, as investors are growing concerned over negative developments that could affect the trade talks. Last month, the U.S. Senate passed legislation in support of pro-democracy supporters in Hong Kong, a move that infuriated the Chinese government. On Tuesday, Chinese media reported that the government was preparing a list of “unreliable entities”, which could be a broad hint that some U.S. companies will face sanctions. As well, U.S. President Trump told reporters that a deal with China could be delayed until after the U.S. election in 2020. These remarks could well be posturing on the part of the President, but they could nonetheless unnerve investors and weigh on crude prices.
Another development that is weighing on oil prices is the question of whether OPEC will trim production in order to boost demand. Saudi Arabia, the largest producer in OPEC, is pushing for larger cuts in order to keep oil prices around the $60 level. However, Russia and other oil producers have shown less willingness to cut into their oil revenue by reducing output. If OPEC fails to reach a new deal on output, the oversupply of crude would increase, sending oil prices downwards.
The extensive breakout on Friday has pushed crude into a new range this week. On the downside, we have the 50-EMA line at support at 55.00, followed by a support level at 54.60.
On the upside, the 200-EMA and 50-EMA lines remain relevant and are additional barriers against upward movement. The 50-EMA is currently at 56.27 and is closely followed by a resistance line at 56.50. Next is resistance from the 200-EMA at 56.99. Above, there is resistance at 57.25.
This article was originally posted on FX Empire
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