The recent announcement regarding the US-China trade agreement has sparked skepticism among market observers due to its lack of clarity. Despite this uncertainty, West Texas Intermediate (WTI) crude oil prices are showing resilience, maintaining a bullish trend as long as they remain above the $63.45 level. As of Wednesday, oil prices have experienced a slight pullback, influenced more by doubt than optimism concerning the trade deal.
The trade discussions culminated late Tuesday with a purported agreement aimed at relaxing restrictions on rare earth commodities. This development is intended to bring the two nations’ trade relations in line with terms established during the recent Geneva summit. However, it remains contingent on approval from both the US and Chinese presidents.
From a technical standpoint, crude oil prices are exhibiting a continued upward trajectory. The US benchmark for WTI has shown strength, with the recent reversal from the $65.40 range holding firm above critical resistance at $63.45. This indicates that buyers are stepping in during price dips, as evidenced by the 4-hour Relative Strength Index (RSI), which remains solidly above the neutral line.
Looking ahead, the next key resistance levels are identified in the $65.30 to $65.60 range, where the previous highs from June meet a significant Fibonacci extension level. Should prices breach this barrier, the next target to watch would be the 261.8% retracement level, positioned around $69.10.
On the other hand, if prices drop below the $63.45 level — a threshold that has previously supported prices — attention may shift to the $62.00 area, marking the low seen on June 5. As the market responds to these developments, investors will be closely monitoring the evolving situation between the US and China, as well as its implications for the oil market.
