The WTI crude oil chart below shows how the market has been pivoting around $55/b since June. During this time the focus has been alternating between the positive impact of OPEC+ production cuts and the seasonal pick-up in demand and trade war driven worry about a global economic slowdown. We continue to view the multiple attempts to recover during this time as fragile given the recessionary risks currently being signaled through the collapse in global bond yields and the inversion of the US yield curve.
Ahead of tariff hikes, both US and Chinese, on September 1 we see limited upside potential with resistance being the trendline from the April peak. The downside risk below $50/b is equally limited through OPEC’s willingness to cut production to maintain stability.
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