WTI retreats from multi-week top, slides to $63.80-$63.75 ahead of US-China trade talks
WTI drifts lower at the start of a new trading week, though the downside lacks bearish conviction.
The optimism over US-China trade talks acts as a tailwind for the commodity amid a weaker USD.
Friday’s breakout through the $63.30 barrier supports prospects for the emergence of dip-buyers.
West Texas Intermediate (WTI) US Crude Oil prices kick off the new week on a softer note and erode a part of Friday's strong gains to levels just above the $64.00 mark, or the highest since April 23. The commodity currently trades around the $63.80 zone, down over 0.40% for the day, though the downside seems cushioned ahead of the key US-China trade talks.
Top US officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, are set to meet Chinese Vice Premier He Lifeng in London for negotiations aimed at defusing trade disputes. This fuels hopes about a possible trade deal between the world's two largest economies, which could support economic growth and increase fuel demand. Adding to this, the emergence of a fresh US Dollar (USD) could act as a tailwind for Crude Oil prices.
The initial market reaction to mostly better-than-expected US employment details turns out to be short-lived amid concerns over the worsening US fiscal situation and bets that the Federal Reserve (Fed) might still lower borrowing costs in 2025. This holds back the USD bulls from placing aggressive bets and turns out to be another factor that should offer some support to the USD-denominated commodity, warranting some caution before positioning for deeper losses.
Meanwhile, investors seem to have digested the OPEC+ decision for another big output hike for July on May 31, suggesting that the corrective pullback might be seen as a buying opportunity and is more likely to remain limited. Even from a technical perspective, Friday's sustained breakout through the $63.20-$63.30 supply zone was seen as a key trigger for bullish traders and validates the positive outlook in the absence of any relevant market-moving US macro releases.
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