Home Oil Price Forecast: WTI slips below $32.00 despite API stockpiles draw, EIA data eyed
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Oil Price Forecast: WTI slips below $32.00 despite API stockpiles draw, EIA data eyed

  • WTI extends pullback from nine-week high with an additional 1.0% loss.
  • API weekly stockpiles drop 4.8 million barrels versus the previous build of 7.6 million barrels.
  • US Dollar drops to a two-week low, risk-tone remains sluggish.
  • EIA inventories, trade/virus headlines in the spotlight.

WTI futures drop to $31.65, down 1.0% on a day, amid the early Wednesday morning in Asia. In doing so, the energy benchmark ignores a draw in the weekly inventory data from the American Petroleum Institute (API).

As per the latest API figures for the week ended on May 15, the US Weekly Crude Oil Stock deplete by -4.8 million barrels versus the previous addition of 7.6 million barrels.

On Tuesday, the black gold surged to the highest since March 16 but took a U-turn from $32.91 amid fears of a full-fledged trade war. Not only the US-China tussle but the recent Aussie-Sino tension also suggests further hardships for the dragon nation. The reason could be traced from US President Trump’s push for an investigation into China’s role in global coronavirus (COVID-19) outbreak.

Even so, the latest comments from the White House Adviser Larry Kudlow suggest that US President Trump is not saying he was tearing up a trade deal with China.

It’s worth mentioning that the black gold’s earlier rally could be attributed to the calls of China’s return to pre-virus crisis days, which in turn increases the energy demand from the major commodity user. Also supporting the price moves were voluntary output cuts by some of the Middle East countries whereas the broad OPEC+ output cut as well as hopes of a virus added to the oil market’s strength off-late.

Traders may now keep eyes on the official US Crude Oil Stocks Change from the Energy Information Administration (EIA), expected 0.967million barrels versus -0.745 million barrels prior.

Other than the stockpiles, updates concerning trade wars and virus will be the key for near-term direction.

Technical analysis

Unless declining below 50-day SMA level of $21.90 on a daily closing, buyers are less likely to lose hopes to reach March 11 high of $36.35. However, 100-day SMA, near $37.42 now, may check the bulls afterward. On the downside, an ascending trend line from April 28, at $29.70 now, may act as immediate support.

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