WTI drops to $108.00, snaps three-day uptrend despite G7 sanctions on Russia

• WTI extends pullback from six-week top to print the first daily loss in four.
• G7 nations levy fresh sanctions on Russian oil, diplomats due to Moscow’s Ukraine invasion.
• OPEC+ refrain from output change, Saudi Aramco’s price relief and China’s covid woes also weigh on the energy prices.
• China trade numbers may entertain intraday traders but risk catalysts are the key.

WTI bulls fail to keep reins as the black gold begins the week’s trading with a downbeat performance, flashing a 1.40% intraday loss to $108.00 by the press time.

In doing so, the energy benchmark ignores the weekend news that levied fresh sanctions on Russia by the Group of Seven (G7) nations. The reason could be linked to the worsening sentiment and attempts by the OPEC+, as well as Saudi Aramco, to ease the oil market worries.

The G7 nations met during the weekend and announced further sanctions on Russian oil, as well as services. “After meeting virtually with Ukrainian President Volodymyr Zelensky, the leaders said they would cut off key services on which Russia depends, reinforcing the isolation of Russia "across all sectors of its economy,” said Reuters.

Alternatively, Saudi Aramco cut its oil prices for North-Western Europe and Asia starting from June while keeping the prices intact for the US in the latest update. On the same line could be the headlines from the Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+. The oil cartel agreed to the previously announced terms of boosting crude output by 400,000 barrels per day (bpd) per month.

Elsewhere, China’s Shanghai announced fresh activity restriction measures due to the worsening covid conditions, which in turn curbs demand forecasts from the world’s largest oil consumer.

It should be noted that the global rush towards tighter monetary policy also weighs on the commodity prices, by way of the firmer US dollar.

Moving on, China’s trade numbers for April will offer immediate directions to WTI crude oil prices. The headline Trade Balance is expected to increase to $50.65B versus $47.38B prior while the Imports and Exports may print mixed figures and can probe the bears.

Technical analysis

Failures to cross a six-week-old ascending trend line, around $110.75 by the press time, triggered WTI’s pullback targeting an upward sloping support line from April 25, near $105.20 at the latest.