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  • WTI wilts following IEA’s warnings on oil market falls.
  • Broad USD rebound amid risk-off adds to the bearish pressure.
  • Next of note remains the EIA Crude Stocks data.

WTI (oil futures on NYMEX) collapsed to the lowest levels since February 2002 at $19.21 in a matter of a few minutes earlier this Wednesday.

The US oil faced rejection just shy of the 21 handle in early Asia and from there turned south, now shedding nearly 2.5% to trade at 19.60 levels.  

Oversupply woes continue to haunt

The black gold extends its four-day losing streak and remains exposed to further downside risks, in the wake of the latest warning issued by the International Energy Agency (IEA). The IEA cited that “there is no feasible agreement that could cut supply by enough to offset such near-term demand losses.”

The agency also projected a record 9.3 million barrels per day (bpd) drop in the global oil demand for 2020 while April’s demand is expected to dive to a 25-year low. Adding to this, the IEA Chief Birol said 2020 may come to be seen as the worst year in the global oil market.

Despite the OPEC and non-OPEC producers (OPEC+) oil output cuts deal reached on Easter, the oversupply concerns continue to persist and weigh heavily on the oil market sentiment.  The OPEC+ agreed to cut output by 9.7 million bpd in May and June.

Further, broad-based US dollar strength and bearish American Petroleum Institute (API) weekly crude stocks data exacerbate the pain in the barrel of WTI. The API data showed Tuesday that the US crude inventories rose by 13.1 million barrels, more than expectations.

Attention now turns towards the official US government inventory figures due to be published by the Energy Information Administration (EIA) later today at 1430 GMT for fresh trading impetus.