WTI struggles to cheer USD weakness, drops 1.40% in Asia

• WTI probes gradual declines from $34.34, still eyes record monthly advances.
• DXY bears the burden of risk aversion wave before US President Trump’s China conference.
• Fears of US-China restrict the black gold’s near-term upside.

WTI seesaws around $33.35/40 during the early Friday’s trading session. The energy benchmark seems to fail in cheering the US dollar weakness amid fears of the US-China tussle. Even so, the barrel of the black gold so far eyes 76% gains during May.

Increasing hopes of the global economic restart and the coronavirus (COVID-19) cure seems to have initially put a bid on the oil prices. However, political/trade tension between the world’s two largest economies seems to have recently weighed on the quote.

Recently, US President Donald Trump called for China conference on 18:00 Friday, which in turn dragged the risk sentiment amid the increasing odds of further sanctions on Beijing.

With that background, US 10-year Treasury yields dropped 3.8 basis points (bps) to 0.667% whereas the US dollar index (DXY) refreshes the 10-week low to 98.18.

Moving on, the weekly prints of the Baker Hughes Rig Count, prior 237, as well as Chicago PMI and Michigan Consumer Sentiment Index, could offer intermediate moves to the energy benchmark. Though major attention will be given to how US President Trump fights against China’s rush secure more powers in Hong Kong.

Technical analysis

While the recent run-up seems to push buyers towards the monthly top of $34.90 and $35.00 round-figure, further upside could be restricted amid overbought RSI conditions. Alternatively, sellers are less likely to enter unless witnessing a break below the confluence of 21 and 50-day EMA near $30.00-29.90.

Additional important levels