- WTI snaps the previous three-day winning streak.
- Rig count data from Canada have been drop to the lowest since 2000, the US data marks six weeks of declines.
- The Permian Basin and New Mexico accounted for 62% of the shutdowns.
- Virus fears remain on the driver’s seat amid a lack of major data.
Having flashed three consecutive days of recoveries, NYMEX WTI futures for June drop 8.75% to $15.48 while heading into the European open on Monday.
An increase in the global supplies, amid fears of the lack of demand due to the coronavirus (COVID-19), could be considered as weighing on the energy benchmark off-late.
The production cut accord between the OPEC and other major oil producers like the US, Canada and Russia, up for action from May 01, seems to have failed to recall the buyers.
On the contrary, a sustained increase in the oil inventory figures and a shutdown in rigs seem to escalate the fears of storing the black gold.
The CNBC relied on the latest oil rig count data from Baker Hughes while saying, “Rig counts in the United States are down to the lowest since July 2016, while the total number of oil and gas rigs in Canada has fallen to the lowest since at least 2000.”
On the other hand, analysts at the Australia and New Zealand Banking Group said, “The Permian Basin and New Mexico accounted for 62% of the shutdowns; an ominous sign considering this region has been one of the more prosperous in the US.”
Further, Goldman Sachs also spread the fears that the global storage capacity will be filled in three to four weeks.
As a result, traders will be keenly observing for any updates concerning the oil majors’ action to tame the price plunge while also paying attention to the virus updates.
Technical analysis
10-day SMA and a multi-day-old falling trend line, respectively near $18.10 and $19.05, seem to guard the energy benchmark’s immediate upside. Meanwhile, $10.00 remains on the sellers’ radar during the further declines.
Share
