Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Vladimir Zernov
Crude Oil

Oil Video 22.05.20.


China Abandons Its Annual GDP Target

Today’s oil trading is centered around news from China. The first important catalyst is China’s decision to proceed without a GDP growth target.

Know where WTI Crude Oil is headed? Take advantage now with 

75% of retail CFD investors lose money

The reason for this move is the huge uncertainty over economic growth perspectives as well as the increasing tensions with the U.S. which make the trade situation hard to evaluate.

Yesterday, I wrote that coronavirus pandemic got to the less-prepared areas of the world and put additional pressure on current world economic growth forecasts.

While some industries were trying to move out of China into cheaper countries even before the pandemic, China is still the world’s factory which heavily depends on the health of the world economy.

If the world dives deeper into recession, China will not be immune even if it fully controls the virus within its borders. This is a bearish scenario for oil and other resources whose price strength depends on China as one of the leading customers.

In this light, the sell-off in oil is not surprising. The recent rally was very significant and needed a pullback anyway. In addition, there’s another negative China-related catalyst in play.

U.S. Is Set To Increase Pressure On China

China decided to pass legislation aimed at containing pro-democracy protests in Hong Kong. The U.S. critisized the move. Some U.S. senators have already promised to introduce legislation to impose santions on those Chinese officials who violated the independence of Hong Kong.

According to a Reuters report, the U.S. also aims to attack China’s HiSilicon, which develops chips for Huawei.

Nowadays, news about the increase in U.S. – China tensions appear almost on a daily basis. While the actual moves are limited, the relations between the U.S. and China are clearly deteriorating, posing additional risks for the oil market.

Recently, China’s oil demand got to pre-crisis levels, and anything that endanger this progress will be taken as a negative catalyst for oil.

Despite all the gloomy news on the China front, it remains to be seen whether the current pull back can turn into something more serious. The recent fundamental data was strong as inventories showed signs of decline while production cuts were aggressively implemented all over the world.

If the upcoming  reports show decreases in both inventories and production, oil prices may get additional support despite worries about a new phase of the U.S. – China trade war.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.