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  • Concerns about the ever-surging COVID-19 cases weighed heavily on crude oil.
  • Wednesday’s bullish IEA forecast, US supply data did little to lend any support.

WTI crude oil reversed an early North American session dip to sub-$64.00 levels and was last seen trading around the $64.60-70 region, still down nearly 1.5% for the day.

The commodity witnessed some heavy selling on Thursday and extended the previous day’s retracement slide from the vicinity of eight-week tops, around the $66.60-70 region touched earlier this month. The continuous surge in new COVID-19 cases in India continued fueling worries about the fuel demand recovery. This, in turn, overshadowed the optimism led by the International Energy Agency (IEA) report on Wednesday and acted as a headwind for the black gold.

In its monthly report released on Wednesday, the IEA noted that the demand for crude is outpacing supply and that the discrepancy will grow further. This comes after the OPEC report earlier this week pointed to strong fuel demand recovery in 2021 amid the solid economic recovery in the US and China. Traders even shrugged off Wednesday’s bullish supply data from the US EIA, which showed a much smaller than anticipated draw of 427K barrels for the week ending May 7.

With Thursday’s decline, the commodity has now turned lower for the week. Some follow-through selling below the $64.00 mark, leading to a subsequent breakthrough the weekly swing lows around the $63.70 region will be seen as a fresh trigger for bearish traders. This, in turn, will set the stage for additional losses and drag spot prices further towards testing levels below the $63.00/barrel mark.

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