- WTI stages a solid comeback following the historic collapse.
- US, Russian oil producers cut oil output, offer support to the bulls.
- Fundamentals still remain bearish amid global recession fears.
WTI (June futures on Nymex) is consolidating the recovery rally to $16.10 levels, as the bulls face exhaustion after the sharp rebound from historic lows of $6.55.
The black gold rose for the second straight session, now defending the 15 handle, still up nearly 11.50% on a daily basis.
The recovery attempts are backed by increased hopes of global oil production cuts, especially after the coronavirus crisis destructed the physical demand for the commodity.
According to Reuters, “Oklahoma’s energy regulator said companies could shut wells without losing their leases, an initial victory for struggling US producers.” Meanwhile, the OPEC+ decided earlier this month to cut output by 9.7 million barrels per day (bpd) to stabilize the oil market.
Despite the rebound in prices, persisting oversupply risks amid a lack of storage facilities continue to remain a drag, keeping the bulls on the edge. The Energy Information Administration (EIA) showed on Wednesday, crude inventories rose by 15 million barrels in the week to April 17 to 518.6 million barrels, near a record of 535 million barrels set in 2017.
The further upside also lacks follow-through, as risk-off trading is back in vogue following devastating Asian and Euro area PMI reports that point to a deep recession globally. The global growth fears continue to dent the demand outlook for oil and its products.
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