- WTI recovers from a two-week low as API registered lower than the previous build in the US Crude Oil Stock.
- The energy benchmark bears the burden of coronavirus-led risk-off, uncertainty surrounding output cut looms.
- All eyes on the EIA’s official inventory data, coronavirus headlines.
WTI snaps the three-day losing streak while taking the bids to $50.20 amid the post-settlement trading on Tuesday, early Wednesday for Asia. The black gold recently benefited from the weekly US oil inventory data from the private provider, namely the American Petroleum Institute (API). However, the pullback is still far from strong as coronavirus risk looms and energy traders await the official stockpile data from the Energy Information Administration (EIA), up for publishing at 15:30 GMT on Wednesday.
API data gives a reason to cheer the US dollar weakness…
The private oil stockpiles’ report for the week ended on February 21 mentioned a build of 1.3 million barrels versus the previous increase of 4.2 million barrels.
Also favoring the pullback could be the broad weakness of the US Dollar Index. The greenback has been under pressure off-late as coronavirus-led risk aversion weighs on the US bond yields and stocks.
Coronavirus keeps the driver’s seat…
With the Chinese epidemic spreading faster outside the national boundaries, mainly in Europe, markets are highly risk-averse. The same exert downside pressure on the expectations of the future oil demand even if Amin Nasser, the CEO of Saudi Aramco turns down any such fears.
Alternatively, the International Energy Agency’s (IEA) chief Fatih Birol signaled a further reduction in the global oil demand forecast even after cutting it to the ten-year low earlier during the month.
It’s worth mentioning that the disagreement over the Organization of the Petroleum Exporting Countries (OPEC)-led production cut has also failed to garner much attention. The global oil producers will meet late next week to discuss demand and production levels amid concerns of a break of OPEC+.
For now, oil traders will be more concerned about the EIA’s inventory numbers, expected 2.467 million barrels versus the previous readouts of 0.414 million barrels.
Technical Analysis
A downward sloping trend line since January 08, 2020, at $53.20 now, acts as the key upside barrier for the black gold.
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