WTI snaps two-day losing streak, still below $23.00, amid risk reset

• WTI recovers from the seven-day low.
• Hopes of further relief from the supply-side seem to favor the recent pullback.
• API data, virus updates will be the key.

While bouncing off the lowest from April 02 to $22.75, WTI registers 1.95% gains during the Asian session on Tuesday. While broad risk aversion, due to the coronavirus (COVID-19), weighed on the OPEC+ output cut the previous day, expectations of further relief from the supply side might have triggered the black gold’s latest recovery.

Officials from the Organization of the Petroleum Exporting Countries (OPEC), US, Russia and Canada, recently agreed for 9.7 million barrels per day (bpd) of reduction in output. However, Saudi Energy Minister said on Monday, per Reuters, that effective global oil supply cuts would amount to around 19.5 million bpd, taking into account the reduction pact agreed by OPEC+, pledges by other G20 nations and oil purchases into reserves.

Also suggesting further recoveries in the oil prices could be the upcoming meet between the Texas oil and gas regulators to consider oil production limits in face of oil market rout, as per Reuters.

Further, the recent recovery in the Asian stock indices, coupled with the sustained rise of the US 10-year Treasury yields, currently near 0.773%, adds strength to the oil price pullback.

On the contrary, the surge in the COVID-19 fatalities, as well as rising inventories, guard the energy benchmark’s immediate upside.

While keeping eyes on the virus updates for fresh impetus, oil traders will also await the weekly inventory data from private US institute, namely the American Petroleum Institute, prior, 11.938M.

Technical analysis

A confluence of 200-HMA, 50% Fibonacci retracement around $23.95/24.05 becomes the tough nut to crack for buyers. On the contrary, a downside break below $22.30 support line will trigger fresh declines towards March 31 top near $21.60.