WTI continues to erase daily gains, falls below $67
- U.S. sanctions against Iran go into effect on Thursday.
- Trade fears don't allow crude oil to make a decisive recovery.
After recording its biggest daily percentage loss since mid-July yesterday, the barrel of West Texas Intermediate staged a modest recovery during the first half of the day on Thursday and touched a fresh daily high at $67.40. However, the bullish momentum lost its strength in the NA session and the WTI was last seen trading at 66.95, where it was up only 20 cents on the day.
Today's recovery seems to be a technical correction of Wednesday's sharp fall. Furthermore, the upbeat data from China and the fact that the first round of U.S. sanctions against Iran came into effect today provided a small boost as well. Nevertheless, the market's reaction to these developments failed to have a long-lasting impact on crude oil prices as investors remain focused on the Trump administration's trade policies' potential negative impact on the global economic growth, which could dampen the demand for oil.
Meanwhile, the weekly report published by the EIA yesterday revealed a less-than-expected decrease in crude oil inventories to put extra weight on the WTI's shoulders. The next data of relevance for the WTI will be tomorrow's Baker Hughes' rig count.
Technical outlook
The initial support aligns at $66.30 (Aug. 8 low) ahead of $65 (psychological level) and $63.60 (Jun. 18 low). On the upside, resistances are located at $67.40 (daily high), $68.60/70 (20-DMA/50-DMA) and $70 (psychological level).