WTI plummets to fresh 6-week lows below $67

• China announces tariffs on $16 billion of U.S. goods will go into effect on August 23.
• Crude oil stocks fall less than expected in the U.S.

Crude oil came under a heavy selling pressure following the disappointing trade data from China on Wednesday and extended its losses throughout the day. The barrel of West Texas Intermediate fell to its lowest level since June 22 at $66.32 and was last seen trading at $66.53, where it was down 3.65% on the day.

Earlier today, the monthly report released by the PBoC revealed that the trade surplus in China declined to $28.05 billion in July from $41.47 billion in June to show the first negative signs of trade conflict weighing on the Chinese economy and created a risk-averse environment. Markets also assessed that data as a factor that could weigh on China's oil demand.

Later in the day, Chinese officials announced that new tariffs on $16 billion worth of U.S. goods would go into effect on August 23 and further escalated the tension to drag crude oil even lower. Furthermore, the EIA's weekly report showed that crude oil inventories in the U.S. decreased 1.351 million barrels last week to fall short of the market expectation of a draw of 3.333 million barrels. 

"The U.S.-China trade war is set to worsen, and its impact on oil prices will be gradual as the situation develops. Crude oil and refined products affected by additional duties will reduce their competitiveness in the Chinese market," Abhishek Kumar, senior energy analyst at Interfax Energy in London, told Reuters.

Technical outlook

The initial support could be seen at $65.70 (Jun. 22 low) ahead of $65 (psychological level) and $63.60 (Jun. 18 low). On the upside, resistances could be seen at $68 (psychological level), $68.80 (20-DMA/50-DMA) and $70.40 (Jul. 30 high).