WTI declines further below 200-day EMA despite geopolitical tension, API draw

• WTI pulls back from six-week high as 200-day EMA caps the upside.
• Worrisome headlines form the Middle East, higher API draw fail to please energy buyers.
• John Bolton’s resignation could ease the tension between the US and Arab countries.

WTI extends its U-turn from the 200-day exponential moving average (EMA) while declining to intra-day low of $57.70 during Asian morning on Wednesday.

The black gold fails to portray larger than the previous draw of inventory levels, -7.200M versus +0.401M prior, shown by the American Petroleum Institute’s (API) weekly crude oil stock report for the US.

The energy benchmark also seems to ignore tensions surrounding Iran and Turkey. Iran recently warned the US to take back its troops off Afghanistan while Turkey is bearing the burden of its hard stand against the Trump administration. Also, the UK-Iran relations are getting worse with British news claiming the Arab nation selling oil from the much-debated ship “Dariya”. Furthermore, Saudi Arabia called for an emergency meeting for the Organization of Islamic Cooperation Foreign Ministers in order to confront Israeli Prime Minister Benjamin Netanyahu’s comments that Iran has a secret nuclear facility and called for action against the Middle Eastern nation.

Supporting the move could be expectations of a bit less tough action against the Middle East after the departure of the US National Security Adviser John Bolton. Also, China’s purchase of oil from Iran is likely to raise barriers for the US-China trade talks, up for October, which in-turn could dampen the outlook for future oil demand.

The official US oil inventory numbers for the week ended on September 03, as to be revealed by the Crude Oil Stocks Change report from the Energy Information Administration (EIA), will be on the traders’ radar for now while trade/political headlines will keep entertaining them during the meantime. The EIA stockpiles might recover from -4.771M previous draw to -2.6000M.

Technical Analysis

With its pullback from 200-day EMA, prices could retest a falling trend-line since late-April (previous resistance) around $57.00 while an upside clearance of the key moving average level of $57.92 needs to cross July-end high of $58.84 in order to aim for $60.00