- Oil witnessed heavy selling for the second consecutive session on Wednesday.
- Renewed COVID-19 jitters fueled demand concerns and weighed on spot prices.
- A modest USD strength contributed to the selling bias ahead of the EIA report.
WTI crude oil extended the previous day’s sharp retracement slide from one-month tops and witnessed heavy selling for the second consecutive session on Wednesday. The downward trajectory dragged spot prices to one-week lows heading into the North American session, with bears now looking to extend the slide below the $61.00 mark.
Investors seem worried that soaring COVID-19 cases in India – the world’s third-biggest oil importer – and Japan will drive down fuel demand. Adding to the market worries was Tuesday’s report from the American Petroleum Institute (API), which showed a surprise build in US crude oil supplies. The developments overshadowed positive signs of a fuel demand recovery in the US, UK and Europe, which, in turn, weighed on oil prices.
This comes amid reports that the US House Judiciary Committee has passed a bill that would open OPEC to antitrust lawsuits over production cuts, which further contributed to the decline in oil prices. Apart from this, a modest US dollar strength also acted as a headwind for dollar-denominated commodities, including oil. Renewed COVID-19 jitters took its toll on the global risk sentiment and forced investors to take refuge in the safe-haven USD.
Moving ahead, the focus now shifts to the release of more closely watched inventory data from the US Energy Information Administration (EIA). The reported is anticipated to show crude inventories fell by 2.975 million barrels during the week ended April 16 as against the decline of 5.889 million barrel previous. A significant deviation from the expected number should infuse some volatility and produce some meaningful trading opportunities around the commodity.
Technical levels to watch
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