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  • WTI retraces from a two-week low.
  • API data suggests a sustained increase in stockpiles.
  • Texas regulators weighing 20% cut in the output, the first in history.
  • EIA data, output cut talks and the virus update will be in the spotlight.

Despite the latest pullback from multi-day low, ignoring the API data, WTI remains below $21.00, currently around $20.80, amid the initial Asian session on Wednesday. In doing so, the black gold might be taking clues from the oil output cut talks between the Texas regulators as well as the risk-on sentiment.

The American Petroleum Institute’s (API) weekly Crude Oil Stock report, for the period ended on April 10, suggested an increase of 13.143 million barrels of increase into the inventories versus the previous addition of 11.938 million barrels. With this, the private data provider marked a consecutive three weeks of a heavy increase in the inventory build.

Also on the negative side could be the International Monetary Fund’s (IMF) pessimistic growth forecast, -3.0% for 2020, amid the coronavirus (COVID-19) pandemic fears.

On the other hand, Texas energy regulators are debating over 20% of production cuts amid arguments that the state shouldn’t disturb the free market fundamentals by announcing manual adjustments. Also supporting the oil price bounce could be the recent risk-on sentiment as portrayed by Wall Street close and the US Treasury yields.

The Organization of the Petroleum Exporting Countries (OPEC), US, Russia and Canada have recently agreed for large production cuts, around 9.8 million barrels per day (bpd), to stabilize the markets.

While supply-side efforts and virus updates could offer immediate direction to the oil prices, official inventory data from the Energy Information Administration (EIA), expected 11.6M versus 15.177M prior, could also offer intermediate clues.

Technical analysis

Unless breaking a two-day-old falling trend line, near $21.45/50, WTI remains vulnerable to revisit sub-$20.00 area.