WTI retreats over 2% on China’s economic slowdown

At the time of writing, the price of a barrel of WTI crude oil is $80.292. On the whole, it is down nearly -1.86%. In response to the economy’s sluggish recovery, China’s central bank lowers crucial lending rates, which affects the outlook for global oil consumption. Saudi Arabia and Russia’s supply reductions as part of OPEC+ offer only modest support as WTI declines from day-to-day highs.

China’s GDP projection is downgraded by Barclay’s, while growing refinery throughput in China provides some relief for WTI. WTI crude oil declines by more than 2% as China’s economic data shows a sluggish recovery and the People’s Bank of China unpredictably lowers key interest rates to jump-start the economy following the Covid-19 outbreak. WTI is currently down 2.35%, priced at $80.49 per barrel.

Crude is affected by dismal Retail Sales and Industrial Production numbers, and the PBoC’s rate modifications raise additional doubts.

The PBoC responded in response to the most recent round of economic data from China, which included Retail Sales that fell short of forecasts and Industrial Production that disappointed investors. The overnight Standing Facility rate was also affected, going from 2.75% to 2.65%, while the central bank of China decreased its 7-day lending rates by 10 basis points to 2.80%.

Oil prices have reversed from year-to-date (YTD) highs as a result of production cuts announced by OPEC+ members Saudi Arabia and Russia. These supply cuts have helped to keep oil prices from falling further.

The price of WTI would probably be under pressure if the investing community was worried that China wouldn’t achieve its 5% growth goal for the year. On Tuesday, Barclay’s lowered its prediction for China’s GDP to 4.5%, citing the country’s continuous property market decline.

On the other hand, the technical support level and China’s refinery thought, jumping 17.4% in July from a year earlier, softened WTI’s decline. The emphasis of WTI traders switches to US crude inventories.

WTI changed direction and dropped below the 20-day EMA around $80.47 per barrel, which is regarded as first support and, if broken, can lead to WTI edging below $80.00. The 200-day EMA is located at $77.89 and the daily low of $78.74 from August 3 will be exposed upon a break of the latter. On the other hand, if WTI maintains its position above $80.00, it would be favourable for buyers, who may then attempt to test the year-to-date (YTD) high of $84.85. However, they must first surpass the daily high of $83.49 set on April 23.