Crude oil slides on global economic slowdown concerns

WTI crude oil is down 0.55% at $70 per barrel due to global economic slowdown concerns. Despite Saudi Arabia and Russia’s supply cut announcement, concerns over manufacturing activity slowdown worldwide continue to impact WTI prices. At the time of writing WTI is trading at $70.24 per barrel.

China’s Caixin PMI expanded modestly by 50.5, but continues to decelerate, trailing May’s 50.9. This, along with the Eurozone’s deceleration, Germany’s technical recession, and the US Manufacturing PMI data staying at recessionary readings, capped WTI’s rally. The ISM Manufacturing PMI for June came at a recessionary area at 46.0, suggesting the US economy is decelerating.

Russia’s intention to boost oil prices reported that it would reduce its exports by 500,000 bpd in August. The total crude oil output brings the Organization of Petroleum Exporting Countries (OPEC) and its allies production to 5.16 million barrels per day (bpd).

Riyadh and Moscow have been trying to bolster prices, but China’s reopening after Covid-19 is failing to gather pace. The WTI price analysis shows that WTI remains neutral to downward biased after failing to crack the 50-day Exponential Moving Average (EMA) at $71.63, but capped on the downside by the 20-day EMA at $70.22.

A breach of the EMA will expose immediate support at $67.10, followed by the March 20 daily low of $64.41. Once cleared, WTI would dive to the year-to-date (YTD) low of $63.61.