- WTI corrects highs still as some optimism on COVID-19 shines through the cracks.
- A sustainable rebound in prices is unlikely in the next two months.
The price of oil on Tuesday has been better-bid in an otherwise bearish environment pertaining to the price wat and a COVID-19 economy, draining demand for the industry. At the time of writing, West Texas Intermediate crude is trading at $24.25 having travelled from a low of $23.12 to a high of $25.14.
In recent moments, we got news of the private survey of the US oil inventories that are showing a headline draw against an expected build. However, the event had little baring over the price as we move into a phase of consolidation.
Some COVID-19 optimism?
Instead, there was some relief in the market pertaining to a decline in COVID-19 cases internationally and an array of stimulus measures which helped to lift spirits on Wall Street on Tuesday, transpiring into a bid in the energy sector.
Also, President Donald Trump’s comments that he is not looking at a months’ long shutdown eased fears that official travel restrictions could be extended for far longer than currently announced helped to encourage some additional profit-taking. Oil futures ended higher and were extending their gain to a second straight session, a day after the Federal Reserve unveiled a historic round of monetary stimulus. The markets now await Congressional approval of a massive fiscal stimulus package as a further booster.
“Notwithstanding, we reiterate that a sustainable rebound in prices is unlikely in the next two months, as wide-scale travel restrictions contribute to more frequent sharp and sudden shocks to demand,” analysts at TD Securities explained.
“The potential for a New Global OPEC+ be very constructive long term, but the demand-side impact of Covid would nonetheless vastly outweigh a potential curtailment agreement. In this context, we see few avenues for CTAs to reverse course on their positioning as downside momentum remains firmly entrenched within the complex.”
WTI levels
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