- WTI bulls gathering pace for a fresh run to the $20 mark.
- Global output cuts, US’ relief plan to aid oil companies support.
- Supply glut unlikely to grow rapidly as feared earlier.
WTI (June futures on Nymex) faced rejection once again near $18 mark on the road to recovery from the historic lows, as the bulls consolidate the latest upsurge around the 17 handle amid cautious market mood.
Despite the retreat from a four-day high of 17.73, the US oil still adds 13% on the day. Markets have turned cautious ahead of the key European Central Bank’s (ECB) monetary policy decision and US Jobless Claims.
Meanwhile, the latest International Energy Agency (IEA) Global Energy Review report could be also associated with the fresh led down in the prices. The report stated that the global energy demand to plunge this year as a result of the biggest shock since World War 2.
The Asian rally in the black gold was built on the expectations that some of the global producers will likely map out creative measures to find crude storage, which is near to full world-wide as the physical demand for killed due to coronavirus lockdowns.
Further, the Trump administration’s commitment to come up with a plan to help the country’s oil companies also underpin the sentiment around the commodity. Treasury Secretary Steven Mnuchin said the plan could include adding millions of barrels of oil to already-teeming national reserves.
The smaller-than-expected increase in the US crude inventories last week points to the early signs of easing supply glut scenario, which in turn render oil-positive. Also, the barrel of WTI cheered news that Norway will slash its output for the first time in 18 months in the H2 2020.
Technically, fresh buying can be seen only on a sustained move above the 18 handle, which could open doors towards $20. To the downside, the immediate support is 16.43, 20-DMA. Further south, the confluence of the daily pivot point and 5-DMA at 14.85 will be a tough nut to crack for the bears.
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