WTI Crude Oil Futures Pressured Lower By Weak Chinese Economic Data

WTI Crude Oil Futures (NYMEX: CL) let loose a staggering 5.85% week-to-date as traders promptly sold off following weakness in China’s manufacturing and services PMI data. China’s post-lockdown economic recovery is seemingly contracting, giving rise to fears that crude oil demand could be subdued, especially considering China is the biggest importer of it.  

Further weighing on the WTI Crude Oil Futures was a sharp surge in crude oil inventories as measured by the American Petroleum Institute (API). Crude oil inventory surged to 5.202M against the consensus of a 1.22M decline. The growth in crude oil inventories week-on-week supports the narrative of weakening demand and has left the WTI Crude Oil Futures exposed to downside potential. 

Following the release of critical Chinese manufacturing and services data, traders will turn to the U.S., which will release heavyweight manufacturing and labour market data, including PMIs and Non-Farm Payrolls. If the U.S. economy points to weakness, further rate hikes could be priced out, exposing the WTI Crude Oil Futures to upside potential. 

Técnicos 

The WTI Crude Oil Futures price action has been subdued below its 100-day moving average to extend the downtrend formation. Support and resistance were established at the $63.65 and $74.02 per barrel (BLL) levels, respectively. Following a rejection of resistance and a high volume breakout below the ascending triangle pattern, price action underwent bearish pressure, taking it lower toward support. 

If bears persist in selling on weaker week-on-week demand, support at the $63.65 BLL level could materialise, given that bearish volumes substantiate. Alternatively, if bearish volumes taper off, a reversal could come into play, with bullish traders potentially looking to the $74.02 BLL level as a point of interest.  

Resumen 

Saudi Arabia’s Energy Minister recently warned crude oil traders that they could be hurt if they shorted blindly, signalling that there could be further output cuts by OPEC+. Traders will watch the June 4 OPEC monthly report to determine if an output cut will materialise. If so, the WTI Crude Oil Futures could be supported above the $63.65 BLL mark.  

Fuentes: Instituto Americano del Petróleo (API), Reuters, TradingView