- WTI extends the previous day’s losses from $38.63.
- EIA inventories rose 1.215M versus -0.152M forecast and 5.72M prior.
- OPEC+ JTC keeps the downbeat forecasts for oil demand in 2020.
- Virus woes outweigh geopolitical tension in Asia and concerning Iran.
WTI drops to $37.78 amid the early Asian session on Thursday. The energy benchmark prints consecutive second day of losses after the US Energy Information Administration (EIA) released higher than forecast stockpile numbers. Also weighing the black gold could be the fears of the coronavirus (COVID-19) wave 2.0 and OPEC and non-OPEC producers’ Joint Technical Committee (JTC) meeting that offered no major positive news the previous day.
The Commercial crude oil inventories in the United States in the week ending June 12th increased by 1.2 million barrels versus the market expectation for a decrease of 0.15 million barrels, as per the latest EIA update. Earlier during the week, the private inventory data published by the American Petroleum Institute (API) also marked an increase of 3.9 million barrels in the week to June 12 to 543.2 million barrels against expectations for a draw of 152K barrels.
Not only the recall of still lockdown conditions in Beijing but recently jumping virus figures from Florida and Texas, as well as Japan and Germany, dim the market’s risk-tone sentiment. In doing so, the war-like conditions in Korea and between China and India, not to forget doubts that Iran is secretively making nuclear weapons, failed to offer any support to the energy prices. Furthermore, the OPEC and OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting failed to offer any interesting facts and kept the oil prices at the mercy of risk catalysts.
The market’s risk-tone remained sluggish with Wall Street benchmarks closing Wednesday on the negative side with the US 10-year Treasury yields declining to 0.73%. Further, S&P 500 Futures follows the footsteps of the US equity benchmarks and prints mild losses near 3,100 by the press time.
Considering the lack of oil-related news/data scheduled for publishing today, traders may keep eyes on the qualitative catalysts for near-term direction. In doing so, the virus updates and geopolitical headlines will be the key to follow.
Technical analysis
A short-term symmetrical triangle between $38.60 and $35.40 seems to restrict the oil benchmark’s immediate moves above the 100-day SMA level of $34.35.
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