WTI Oil Hesitating Above $80 Despite China’s Efforts
Crude Oil was very bullish during July and the first week of August, with US WTI crude almost touching $85 before the reversal lower. The economic issues in China have turned the sentiment negative for risk assets, which have been showing weakness since early this month. Crude Oil slipped below $77 last week, although we saw a reversal higher as the USD retreated by the middle of the week after some soft manufacturing and services PMI figures.
The price climbed above $80 by the end of the week, but buyers couldn’t push it too high above that major level. On Friday afternoon we saw a dip to $78.20s after Powell’s speech which left the door open for everything since he didn’t signal a pause in rate hikes yet, but the price quickly reversed back up and moved above $80 again. Although it has been hanging around these levels since then, which shows uncertainty in the market.
Earlier today, despite China’s efforts to stimulate its stock market by reducing stamp duty on stock trading, crude Oil slumped lower again, with Oil futures for WTI (West Texas Intermediate) dipping below $80, showing a decrease of 0.1%. This drop in Oil futures occurred even after China’s Central Bank had recently lowered the one-year loan prime rate from 3.55% to 3.45%. It’s worth noting that the rates of new and existing loans in China are tied to the one-year loan prime rate. Despite this effort, the market was skeptical and traders’ response was not as positive as anticipated.
In a statement over the weekend, the Chinese Finance Ministry announced its decision to reduce the stamp duty on stock trades. This move aimed to revitalize the capital market and enhance investor confidence. It comes in the context of China’s ongoing economic recovery, which has not progressed as initially projected. So, Chinese authorities are implementing various measures to stimulate the economy and promote growth, but the economy is not responding positively and Oil traders feel anxious, which is a sign of a bearish move to come.
WTI Live Chart
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