Oil Price Analysis: WTI dips below $42 per barrel as sentiment shifts to the negative side

• WTI is now trading 0.15% lower on Thursday after a breaking USD 42 per barrel for the second time this week.
• There is now a chart pattern emerging and a break lower could mean some short term weakness is ahead.

WTI 1-hour chart

WTI has been pulling back over the last hour as sentiment across the financial markets turned sour. The war of words between the US and China is still escalating and the US Secretary of State Pompeo is set to speak about recent developments later in the session. The COVID-19 pandemic is obviously the main issue as travel restrictions remain in place in certain parts of the world but adding trade tensions to the mix could really be problematic. 

Looking at the chart, there is still clearly an uptrend in WTI. The OPEC+ output cuts have helped the situation dramatically but even they will need to be rolled off. At the last OPEC JMMC meeting, it was recommended transitioning into the 2nd phase of the cut agreement which is set to ease output cuts by 2 million barrels per day starting from August. 

There is now a wedge pattern forming on the hourly chart. A break to the downside could see a lower high lower low pattern form. This could mean the market might see some bearishness in the short term. The Relative Strength Index and the MACD are showing signs of weakness too. The MACD histogram is in the red but the signal lines remain above the mid-point. While the Relative Strength Index has dipped below the 50 area and this could be considered a bearish signal. 

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