WTI battles $61 as two-day sell-off extends on rising US supplies, covid woes

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  • WTI bounces off lows but not out of the woods yet.
  • Covid fears, higher Iranian oil exports and US supplies weigh on oil.
  • US dollar rebound also adds to the bearish sentiment around WTI.

WTI (futures on NYMEX) is trading under pressure around the $61 mark, looking to extend losses for the third straight day amid a bunch of negative fundamental factors.

To begin with, the main reason for the recent sell-off in oil prices is the surging covid cases in Asia, especially in India and Japan, which reignites tensions about the global economic recovery and prospects for fuel demand.

The next catalyst is seen as the unexpected build in the US crude stockpiles last week. The Energy Information Administration (EIA) data released Wednesday showed that commercial crude stocks climbed 600,000 barrels to 493.02 million barrels in the week ended April 16 against expectations of a fall by 4.4 million barrels.

Further, a broad-based US dollar rebound amid a mixed market mood also drags the USD-sensitive WTI barrel lower. Lastly, elevated exports from Iran add to the weight on the black gold.

According to Petro-Logistics, Iranian oil exports remain elevated, totaling around 500,000 bpd so far in April. The country’s oil exports may not return to 202o lows with talks on reviving nuclear deal continuing, the Geneva-based oil supply, shipping and logistics data provider said.

Looking ahead, the US oil traders will continue to watch out for fresh covid updates, US dollar price action and Wall Street sentiment, in order to place any near-term bets.

WTI technical levels to watch

 

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