Chinese demand-linked concerns dragging WTI’s price down

WTI fell to a low below $80.00 and then jumped back above $82.00, clearing most of its daily losses. China reported weak Trade Balance data, with Exports and Imports coming in weaker than expected in July. The American crude oil is trading at $82.58 at the time of writing.

A stronger US dollar also limits the WTI’s advance, but losses are limited by Saudi’s production cut prospects. On Tuesday, the West Texas Intermediate (WTI) saw more than 1% losses, mainly driven by soft Trade Balance reported by China in July.

Recovering dollar contributed to the decline, with the DXY comfortably sitting above 102.50. That being said, the hope for black gold’s prices is the prospects of further production cuts by the Saudis and a tighter global supply.

Earlier on the day, and during the early Asian session on Tuesday, China reported weak Trade Balance data. Exports fell by 14.5% YoY in July, higher than the 12.5% expected, while Imports declined by 6.9%, also above the expectations of the 2.5% decrease expected. It’s important to mention that China is the biggest Oil importer, so a weaker local economy lowers energy demand pushing the WTI downwards.

Supply risks are seen as rising to their highest level since early 2022, with the start of the war in Ukraine. In addition, they add, the voluntary production cuts by the Saudis and Russia’s export curtailment should contribute to a tighter global supply and push the price northwards.

Observing the daily chart, it is apparent that WTI is currently experiencing a neutral to bearish trend as the bulls struggle to maintain their momentum.