- WTI fails to holds onto the previous day’s losses.
- API marked another huge increase in inventories, oil stocks at the Cushing registered historical jump.
- Expectations of macro production cut at this week’s OPEC+ meeting gain ground.
- EIA, virus updates will be important to watch for near-term direction.
WTI bounces off $23.95 to currently around $24.40, as per NYMEX, during Wednesday’s Asian session. In doing so, the black gold ignores a huge build in inventories as suggested by the private industry data provider the American Petroleum Institute (API). The reason could be traced from the recently renewed hopes of the extended global production cuts in this week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, mostly known as OPEC+.
Stockpiles fail to please the bears…
The API’s weekly Crude Oil Stock report, for the period ended on April 03, suggested an increase of 11.938 million barrels of increase into the inventories versus the previous addition of 10.485 million barrels. Also on the price-negative side could be stockpile data from the Cushing, Oklahoma, which mentions the largest jump, of 6.8 million barrels, for the same period.
Even so, the energy benchmark bounced off during the post-settlement period amid recently rising calls of a production cut at the Thursday’s OPEC+ meeting. Bloomberg cited US President Donald Trump’s previous day comments concerning the “automatic” reduction in domestic output as a precursor of a macro move.
“A deal hinges on some form of cooperation with America, according to delegates involved in the talks. The production drop forecast by the U.S. government on Tuesday could be enough to satisfy Saudi Arabia and Russia,” said the news from Bloomberg.
It’s worth mentioning that the US Energy Information Administration (EIA) cut oil production expectations by near 10% to an average of 11.8 million barrels a day during 2020.
Looking forward, investors will keep eyes on the stories surrounding this week’s OPEC+ meeting while the official inventory data from the EIA, expected 10.133M versus 13.834M prior, could also offer intermediate clues.
Technical analysis
While 21-day SMA near $27.20 holds the key to Friday’s high around $28.80, sellers will wait for a downside break of $23.00 for fresh entry.
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