Crude oil WTI drops to $62.30 as trade wars are back on the table

• Trump is considering an additional $100 billion worth of tariffs from China imports.
• Crude oil falls to weekly lows testing the $62.30 support level.

The Crude oil WTI is trading at around $62.28 down 2.38% as renewed trade war fears between the US and China weigh on the black gold.

Trump said he would consider tariffs on an extra $100 billion of imports from China, which resulted in an escalation of the trade tariffs conflict between the US and China. US stocks are down, gold is grinding higher and yen pairs are gaining a little traction as risk-off is slowly settling back.  

“There is a risk for oil prices that China uses the bazooka option it has on U.S. crude oil exports. China is the main importer (after Canada) of US crude oil, to the tune of about 400,000 barrels per day. If China was to impose counter tariffs on US crude, it would become quickly very heavy for the US supply and demand picture, resulting in US crude oil price pressure that would have a negative impact on global oil prices.” According to Petromatrix.

Additionally, earlier in the day, the worst-than-expected US Non-Farm Payroll (NFP) in March compounded the negative sentiment on the US economy. 

“The US created just 103K reports in March, the lesser in six months, the unemployment rate remained steady at 4.1%, and wages' growth remained within the usual parameters, resulting in an overall disappointing NFP report.” According to Valeria Bednarik Chief Analyst at FXStreet. 

Crude oil WTI weekly chart

The bears are testing last week’s open and the $62.30 support. The short-term momentum remains titled to the downside. 

Crude oil WTI daily chart

The bulls were unable to lift the market above the $63.72 resistance and the market is now testing the lows seen on last Wednesday and the $62.30 support which acts as immediate support. The next support is seen at $61.09 previous swing low.  

Crude oil WTI 4-hour chart

The market is sliding down in a bear channel. Resistance is seen at $62.81 swing low and the $63.72 supply level. If the bears manage to break $62.30 support, the level will revert to resistance. Looking down, the next significant level is seen at $61.09 previous swing and the $60 figure. The short-term momentum remains bearish as long as the bears keep the market below $63.72.