- WTI has moved higher as it tests the bear’s commitments at key resistance.
- US Gulf Coast storms and the relentless spread of the coronavirus push and pull on the price, demand and supply.
At the time of writing, WTI is trading within a narrow $42.26 and $42.86 price range, +0.73% on the day so far while traders assess the back-to-back storms hitting the US Gulf Coast.
Gulf Coast refiners account for 45% of U.S. oil processing capacity.
Gulf grades of the black gold have been rallying due to approximately 60% of the region’s production has been disrupted.
However, in tracking the storms, Tropical Storm Marco weakened sooner than expected, sparing the Gulf Coast from two simultaneous hurricanes, as had been forecast.
Laura traced the southern coast of Cuba on Monday morning, but the brunt of the storm was offshore. Nevertheless, producers by Sunday had shut more than 1 million barrels per day of Gulf Coast offshore oil production.
Storm Laura is forecast to strike the Texas/Louisiana coast by Thursday as a Category 2 hurricane with 105 mile per hour (169 km/h) winds and heavy rain.
Coronavirus resurgence
Meanwhile, anchoring the price of oil, coronavirus is weighing on global demand with signs of rising cases in Europe and Asia. Cases are moving in the wrong direction.
Italy and many other countries including France and Germany are now recording new case numbers equal to those last seen in April and May.
Additionally, parts of Asia that seemed to have COVID-19 under control have witnessed fresh outbreaks. South Korea, China, Japan and Vietnam, which had few or no cases in the past month or so, are seeing a resurgence.
On the other hand, however, as analysts at TD Securities pointed out, strong OPEC+ compliance and a weak recovery in the shale patch are setting the stage for further increases in energy prices.
We expect demand to continue its recovery into 2021. In the near term, continued price strength in natural gas has prompted CTA positioning to target a net positive length for the first time since a short period in late 2019.,
the analysts added.
WTI levels
Meanwhile, from a weekly perspective, the price is testing a critical resistance.
A break and hold of structure will open the prospect for a run towards the psychological $50 level.
Failures above $40 and break below support opens risk back to test the prior resistance set in April of this year some $10 lower from today.
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