Crude Oil WTI Futures look to be passing through the ups and downs of tariff trade war between United States and China. Finally, the countdown has started with accusing each other for launching the largest trade war in economic history. China has implemented retaliatory tariffs on 545 items worth $34B in response to the comparable U.S. duties that were enacted at midnight. Another $16B in tariffs is expected to go into effect in two weeks and the US President Mr. Trump has warned of additional levies of $500B on Chinese goods.
As part of the retaliatory response, Beijing has threatened a 25% tariff on U.S. crude imports. That could make American crude shipments to China -calculated to be about 400,000 barrels per day, uncompetitive. Finally, the shots have started to be fired without realizing the after effect of this economic bombardment on each-other. Let us see the announcement of Natural Gas today before taking further idea about further directional move on announcement of Natural Gas futures before moving ahead.
I find it amazing that the U.S Stock index futures and Chinese markets look unaffected by the widely anticipated trade developments which raises my suspicion about the movement of commodities because they have started to reflect these tilting geopolitical move on their moves. Especially, the WTI Crude Oil futures which are going through an increasing pace of volatility as the Beijing has threatened a 25% tariff on U.S. crude imports, as part of the retaliatory response. That could make American crude shipments to China - calculated to be about 400,000 barrels per day, uncompetitive.
Secondly, as US crude imports jumped 699k b/d w-o-w, US crude exports fell to 2.336 million b/d or a drop of 664k b/d, I find the WTI Crude Oil futures to remain under bearish pressure during the upcoming weeks.
Finally, the statement from newly elected Mexican President, Manuel Lopez Obrador on July 7th, 2018 that he will seek to end the country's massive fuel imports, nearly all from the United States, during the first three years of his term while also boosting refining at home. He further said that he will also prioritize growing crude oil production domestically, which has fallen sharply for years. I find this recent development will have some reflection over crude oil futures on the first trading session of the Week.
Amid the current geo-political moves, I’ve found the gold futures to remain under the utmost volatility. I expect the following trading zones for Gold futures for the week of July 8th, 2018.
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