Crude whipsawsCrude oil suffered a deep sell-off yesterday, but rallied off its lows soon after the US open. In little over an hour, front-month WTI jumped from the day’s low of $70.50 to break briefly above $73.00. Prices have drifted lower ever since. The initial sell-off came after China announced retaliatory tariffs on imports from the US. The bounce came after President Trump turned his focus back on Iran, renewing pressure to curb the theocracy’s nuclear ambitions. This led to a severe drop in Iranian oil exports during Mr Trump’s last presidential term. China’s tariffs are set to come in next week, giving an opportunity for resolution. Presidents Trump and Xi are expected to have a conversation before these tariffs are implemented. China’s levies are focused on energy products including crude oil, liquified natural gas and coal. But China is also considering restrictions on the export of rare earth metals, and has said it will launch an antitrust probe into Google. Technically, oil is trading around the 61.8% Fibonacci Retracement of the six week rally since early December. If it can hold around here, then it increases the probability of a rebound.
