WTI drops more than 30 cents as China registers first GDP contraction since 1992

• WTI feels the pull of gravity on China's dismal GDP growth rate. 
• China's GDP contraction suggests a significant weakening of the demand side of the fundamental equation of oil.

West Texas Intermediate crude is losing altitude with China reporting economic contraction for the first time since 1992. 

China, on Friday, reported a 6.8% drop in the gross domestic product (GDP) for the first quarter in annualized terms versus expectations for a 6.5% decline. China also reported grim numbers for Industrial Production and Retail Sales. 

The black gold fell from $20.10 to $19.74 after the release of the dismal China data, having bounced from lows below $19.50 to $20.10 during the overnight trade. 

Oil may continue to lose ground during the day ahead as China's historical slump has underscored the demand destruction brought on by the virus outbreak. The OPEC+, a group of major oil producers led by Russia and Saudi Arabia, agreed to cut output by 9.7 million barrels per day to support prices. However, a majority of analysts believe the output cuts aren't enough to compensate for the slide in demand. 

While oil is facing selling pressure on the back of dismal China data, risk currencies sensitive to China's economy like the AUD are showing resilience. The AUD/USD clocked fresh session highs above 0.6375 soon before press time. Further, the futures tied to the S&P 500 are reporting over 3 percent gains on renewed hopes for coronavirus treatment. 

Technical levels

Support: $19.53 (hourly chart support), $19.16 (April 15 low). 

Resistance: $20.32 (lower high on the hourly chart), $20.66 (resistance of April 15 high on the hourly chart).