WTI drops 1% towards $ 58.50 amid trade tensions, weak China exports

• Oil slips on looming US tariffs hike, dismal Chinese exports data.
• Downside appears capped by deeper OPEC+ output cuts.
• Focus on trade updates and US weekly supply reports ahead of FOMC.

WTI (oil futures on NYMEX) is down over $1 from three-month highs of 59.85 reached last Friday after the OPEC and its allies (OPEC+) agreed to deepen their output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd until March 2020.

Further, the black gold also derived support from the US oilfield services company, Baker Hughes, data that showed the US Rigs Count fell for the seventh consecutive week to 661, the lowest since April 2017.

However, on Monday, the barrel of WTI corrected after concerns over the Chinese economic situation resurfaced, in the face of a sharp drop in the country’s exports. The weak data highlights the negative impact the US-China trade war is having on the economy.

Meanwhile, markets trade with caution amid looming US tariffs hike on balance of Chinese imports, keeping the higher-yielding oil under pressure. The tariffs hike is effective from this Sunday.

Attention now turns towards the US weekly Crude Stocks data for fresh trading impetus ahead of the FOMC rate decision while trade-related headlined will continue to remain the main market driver.

WTI Levels to watch