Last Thursday the price of oil fell like a stone. A dramatic crash, which is clearly visible in the chart (here WTI oil since July 26th). In the trade war between China and the USA things are going so fast that we almost forget which event is responsible for which price movement. That’s why we mention this crash again. Last week Donald Trump announced via Twitter punitive tariffs of 10% on another 300 billion Dollars of Chinese imports. Buummm. That was a strike! The WTI oil price fell in a very short time by 2.87 Dollars from 56.47 to 53.60 Dollars.
Oil price after the big crash
And then on Friday there was a technical rally to up to 55.90 Dollars. However, the chart shows that the WTI oil price has stabilized yesterday and today at around 55 Dollars. Due to the massive escalation of the trade war between China and the USA in the last two days (new tariffs, agricultural import stop, alleged currency war) the stock markets fell extremely fast and strongly. Since Friday evening the Dow has lost about 800 points. The Dax has lost 200 points. In the meantime the losses were significantly higher. For the oil market this uncertainty means above all one thing: global demand for oil could collapse massively if the trade war continues to worsen. And that is currently the case.
Next crash ahead?
This scenario is followed by the question: Why didn’t the oil price crash yesterday and today among with the stock markets? If we take a closer look, we can see how WTI oil fell very briefly from 55 to 53.70 Dollars tonight. However, the market has been able to correct this quickly up to 55.11 Dollars this morning. So again the question: Are we on the oil market in the eye of the hurricane at the moment and the next crash is imminent? 54 Dollars in the WTI oil price could be seen quite simply as the lowest mark. If the market falls below this level, it may be able to see lower prices quickly.
But don’t forget the massive crash last week. It may also be important that market players think: We on the oil market already priced in the slump in demand for oil last week, so we are not falling any further now. What scenario will occur? The situation is currently much more exciting than the chart currently indicates. So please take a close look today and tomorrow. In the last two weeks US oil inventories have not really moved the market, unlike in the previous weeks. Can API inventories still give an impulse tonight?
It is conceivable that the market will also remain a political market. This has been driven by the impulsive measures of Donald Trump as well as the Chinese reactions. We are staying away from trade recommendations. A further slide in the oil price is quite conceivable, but there are no guarantees. And once again our hint. We preach it like a prayer wheel. The oil market is and remains unpredictable. Make your own opinion!