- WTI relief rally eases as investors resort to profit-taking.
- Economic contraction woes amid coronavirus crisis weigh.
- Fundamentals still remain bearish amid global recession fears.
WTI (June futures on Nymex) has reversed the intraday gains, now shedding nearly 1.50% to trade near $16 mark. The bulls faced exhaustion at $17.95 after witnessing a whopping 60% increase over the last two trading days.
WTI slips back below 20-DMA
The staggering rally in the black gold loses strength in the European session, as investors fret over the recent dire macro data released from both sides of the Atlantic due to the coronavirus outbreak. The devastating macro news heightened the economic contraction fears and in turn oil demand growth concerns.
The prices have slipped back below the 20-DMA at 17.66 while bears also tested the daily pivot point support of 16.04, as markets resorting to profit-taking after a tumultuous week unseen in the history of oil trading.
The solid recovery seen in the barrel of WTI from the historic lows can be attributed to hopes of oil output cut by the oil giants worldwide while the fresh exchange of threats between the US and Iran also offered support to the bulls.
US Treasury Secretary Steve Mnuchin’s comments also helped underpin around oil. Mnuchin said on Thursday, he is considering a government lending program for US. energy companies looking for federal aid.
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.
Meanwhile, John Kemp, Energy Analyst at JKempEnergy explained, “OIL TRADERS closing positions for WTI for delivery in Jun and Jul because of concerns about physical delivery, plus the introduction of liquidation-only restrictions by some brokers, preventing new positions being initiated, likely helped squeeze WTI prices higher on Wednesday and Thursday.”
Looking ahead, attention shifts to the US Durable Goods data that will throw further light on the US economic health, which could likely have some impact on the oil trades. Also, the weekly Baker Hughes oil rigs count data will be closely eyed.
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