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  • WTI tries to recover from a multi-week low amid mildly positive risk-tone.
  • An increase in API oil stocks, fears of coronavirus outbreak keep the energy benchmark under pressure.
  • EIA data, updates from China and PMIs from the key economies will be important.

WTI bears catch a breath near the lowest since January 2018 while flashing $49.85 as a quote during Wednesday’s Asian session. The black gold has been bearing the burden of expectations that coronavirus will weigh on global energy demand. Further, the recently released private oil stock report from the American Petroleum Institute (API) strengthened the bears.

The latest Crude Oil Stock data from the American Petroleum Institute (API), for the week ended on January 31, suggest the addition of 4.18 million barrels against an earlier draw of 4.27 million barrels.

Coronavirus outbreak in Hubei recently crossed 16,000 mark while also marking a death toll of 479 by the end of Tuesday, as per Reuters. The Chinese government is actively trying to tame the contagion and is gaining global support even before the World Health Organization (WHO) termed the epidemic as an international emergency. Even so, there are no signs of abating as the deadly virus continues to rise.

While identifying the recent fall in energy prices, members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia are discussing an extension into the global production-cut accord. The news helped WTI during the European session on Tuesday just to decline afterward.

Considering the market’s recent recovery and upbeat data from the major economies, an extension of positive PMIs from China, the US, EU and the UK could help the WTI recover from the multi-month low. However, fears of coronavirus outbreak could keep weighing on the energy prices. Traders will also watch for the official inventory release for the week ended on January 31, to be released by the Energy Information Administration (EIA) on 15:30 GMT. The Crude Oil Stocks Change is expected to soften to 3.0 million barrels from 3.548 million barrels prior.

Technical Analysis

Unless bouncing back beyond October 2019 low near $51.00, oil prices are likely to decline further towards the year 2018 low around $42.50.