Juggles in between bleak global demand and output cuts

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• Oil consolidates as the upside is restricted due to weak global demand while the downside is being supported by OPEC’s production cuts.
• The black gold witnessed a nosedive move after a false and misleading report stating that US-Iran nuclear deal.
• Straight 200-period EMA indicates that the overall trend is non-directional.

West Texas Intermediate (WTI), futures on NYMEX, have turned sideways around $71.00 in the London session. The black gold is oscillating post a V-shape recovery from the crucial support of $69.00.

On Thursday, oil prices witnessed a nosedive move after a false and misleading report stating that the US-Iran nuclear deal that would let the Islamic Republic legally export some of its sanctioned oil was refuted by the White House, as reported by Reuters.

The oil price is expected to remain on tenterhooks as demand concerns China is demonstrating a bleak oil demand. The situation of deflation in China and producers’ inability of increasing the prices of goods and services at factory gates are evidence that overall demand in China is extremely weak.

Investors should note that China is the leading importer of oil in the world and weak Chinese demand put significant pressure on the oil price.

The oil price is consolidating in a range of $67.00-74.73 for more than one month. The upside in the oil price is restricted due to weak global demand while the downside is being supported by oil production cuts by OPEC.

A straight 200-period Exponential Moving Average (EMA) at $71.80 indicates that the overall trend is non-directional.

In addition to that, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, indicating a lackluster performance.

A solid recovery above May 24 high at $74.70 will drive the asset toward April 28 high at $76.84. Further recovery above the latter would expose the oil price to April 26 high at $77.86.

In an alternate scenario, a downside move below May 31 low at $67.12 will drag the asset toward the $65.00 support followed by May’s low at $64.31.

WTI two-hour chart