3 June 2019, AtoZ Markets – Concerns over the potential negative impact of a prolonged trade conflict between the US and China on the global economy and the oil demand outlook continue to weigh on Crude oil. Prices remained under heavy pressure on Friday printing new lows not seen since mid-February.
The data published in China showed that the manufacturing sector expanded at a slower pace than expected in May and the business activity in the service sector contracted in the same period. Furthermore, reports of China's Commerce Ministry preparing a list of "unreliable entities" list to combat foreign firms that cut supplies to China hinted at the further escalation of the trade war down the road.
Additionally, President Trump vowed to impose tariffs on all Mexican imports to trigger a fresh wave of flight-to-safety on Friday. Meanwhile, the weekly report published by the Baker Hughes Energy Services revealed that the number of active oil rigs in the US rose to 800 from 797 last week pointing higher production in the US.
Crude oil price technical forecast
Crude oil prices continued to decline during Friday's session as all near term support levels were breached to the downside.
The price is currently hovering just below the $53.26 resistance level, however, we can notice a huge divergence between the price and the momentum which points towards a recovery in prices. After such an overextended move, we expect a recovery in the prices to retreat from the extremely oversold state. That is why we will be focusing on the $54.42 resistant level
Support: 52.5 / 51.83
Resistance: 53.26 / 53.89
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