WTI off highs, steadies around $ 54 amid weakening Chinese oil demand

• Dwindling Chinese oil demand, US-China trade war offset US-Mexico trade progress.
• Finds support from comments by Saudi Arabian Oil Minister, risk-on sentiment.
• All eyes on trade wars, global equities and US supplies report for near-term direction.

WTI (futures on Comex) extended its retreat from six-day tops of 54.82 and now looks to stabilize around the 54 handle, having shaved-off the gains led by the optimism on the US-Mexico tariff aversion, as the Chinese growth concerns resurface and weigh down on the investors’ sentiment.

The latest data published by China Customs earlier today showed that the country’s crude oil imports slipped to around 40.23 million tonnes in May, down from an all-time high of 43.73 million tonnes in April. The drop in the oil imports re-ignited the demand concerns from the world’s second-largest oil consumer, China.

Moreover, the ongoing US-China trade war continues to dampen the global economic growth outlook and collaborates to the renewed pressure on the barrel of WTI while the clouded outlook on whether the OPEC + will agree to extend the output cuts later this month also remains oil-negative.

Despite the pullback, the prices continue to derive some support from the latest comments by the Saudi Arabian Energy Minister Al-Falih and the risk-on action in the European equities. Al-Falih noted that he hopes to reach a long-term cooperation deal at the next meeting.

The focus now shifts towards the sentiment on Wall Street while fresh trade-related developments will also offer fresh cues on the oil price-action ahead of the US supply reports due later in the week ahead.  

WTI Technical Levels