- Oil bears take a breather before the next leg lower.
- Oversupply and demand concerns remain a drag amid the corona crisis.
- Risk-on offers respite to WTI bulls ahead of EIA crude stocks data.
WTI (June futures on Nymex) stalled its recovery momentum and dropped as low as $10.29 in Asian trades. Since then, the prices have entered into a bearish consolidative phase, with the upside attempts sold-off around $12 region, as we head into the mid-European session.
The bears take a breather, gathering pace before the next south run to test Tuesday’s low of $6.55, the lowest so far for the June contract. In light of the historic US oil futures crash, Brent oil also followed suit and hit the lowest since 1999 at $15.98.
Oil markets are seen pretty calm over the last hours after witnessing the wildest days in the history of oil trading, thanks to the coronavirus pandemic. The risk-on market profile in Europe, with the regional equities rallying in sync with the US equity futures, appears to offer some temporary reprieve to the oil bulls.
WTI oil: Recovery still weeks away – Goldman Sachs
The oil traders also absorb the latest comments by the Iranian Oil Minister, citing that the OPEC and non-OPEC producers (OPEC+) may need ‘other measures’ to support oil prices. Meanwhile, the Goldman Sachs Head of Commodities said that the WTI recovery is still weeks away, suggesting that the downside risks still remain intact.
The underlying theme still remains bearish with a lack of storage facilities to mitigate the oversupply scenario in a time where the physical demand for the commodity has almost vanished due to the virus outbreak induced global lockdowns and travel restrictions.
Markets now look forward to the weekly US Crude Stocks Change data due to be published by the Energy Information Administration (EIA) later today for fresh insights on the US supply-side scenario, which could likely have a significant impact on the prices.
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