Oil Price Fundamental Daily Forecast – Bearish Factors, Thin Pre-Holiday Trade Weighing on Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply lower shortly before the U.S. opening on Friday as concerns over an escalating trade dispute between the United States and China dampened investor sentiment.

At 1035 GMT, October WTI Crude Oil is trading $69.77, down $0.48 or -0.68% and November Brent Crude Oil is at $77.55, down $0.47 or -0.60%.

Losses could be limited by concerns over impending U.S. sanctions against Iran and falling Venezuelan output, which threaten supply.

Overbought conditions could also be driving the price action ahead of the long U.S. holiday week-end. It’s been 12 sessions since the last major bottom so the markets may be due for a near-term correction. Traders could also be using the mounting trade concerns as an excuse to book profits after a prolonged rally.

The primary stories today deal with trade issues. U.S. President Donald Trump threatened in an interview with Bloomberg News on Thursday to withdraw from the World Trade Organization, his latest salvo in a deepening dispute between the United States and its major trading partners.

Additionally, Trump is prepared to ramp up a dispute with China and has told aides he is ready to impose tariffs on $200 billion more Chinese imports as early as next week, Bloomberg reported on Thursday.

Forecast

Due to thin trading conditions ahead of the long U.S. holiday week-end, it’s going to be difficult to reverse today’s early weakness so I anticipate a weaker trade throughout the session. Furthermore, the narrative is not likely to change very much for the bullish traders, so the bearish news over trade should continue to dominate the trade.

While supply worries continue to be supportive, economists are also worried that rising trade barriers between the world’s major economies will drag on global growth and, by extension, erode energy demand and this is potentially bearish for prices.

If the selling pressure strengthens over the near-term, WTI crude oil could pull back into its major pivot zone at $68.46 to $67.59 and Brent crude oil could retrace back to $75.79 to $74.74.