Despite several reassuring statements today from the US end of the US-China trade war, WTI crude oil has made only a muted recovery and is trading at $56.63 as at the time of writing.
The Chinese Commerce Ministry spokesman Gao Feng has been quoted as saying that there has to be a rollback on tariffs for a deal to go forward. In a report attributed to the South China Morning Post (SCMP) Feng was quoted as saying:
“The trade war between the two nations started with the imposition of tariffs and it should end with their removals…that is an important condition for reaching the deal.”
“The significance of phase one deal should reflect the scale of the tariff rollback”.
These comments and the impact of Wednesday’s upbeat crude oil inventories report, have limited any upside momentum on crude oil prices this Friday.
The support level to watch remains 56.50 (38.2% Fibonacci retracement level). A breakdown of this level targets 55.73 (Sep 24 and Nov 8 lows) and also brings the 23.6% Fibonacci retracement level (54.30) into focus.
On the flip side, further price recovery pushes WTI crude oil up to the 50% Fibonacci level (58.50), with possibility of attaining 60.45 (61.8% Fibonacci level and October 10 high) if upside momentum can pick up steam.