WTI drops to one-week low, around $22.00, on demand-supply concerns

With the demand-supply matrix weighing on the energy benchmark, WTI refreshes one week low to $21.68, currently near $22.05, amid the initial Asian session on Monday. While demand concerns due to the coronavirus (COVID-19) have already been weighing on the black gold, signals suggesting an increase in supplies seem to also have dragged the quote off-late.

Bloomberg released news over the weekend that the Plains All American Pipeline asked suppliers to scale back production. The news also mentioned that Plains and Enterprise Products Partners is requiring customers to prove they have a buyer or place to offload the crude they are shipping.

In a separate piece, Bloomberg also raised the rift amid the Organization of the Petroleum Exporting Countries (OPEC) members. The update, while relying on the sources, suggested that the Presidency Algeria urged convening a panel to consider assessing market conditions and falling prices but did not get enough backing to go ahead. It was also mentioned that Saudi Arabia opposed the move. It should also be noted that Saudi Arabia earlier turned down rumors that relate to the talks with Russia on minimizing the output.

Elsewhere, the calls of missile traces in Saudi Arabian capital and North Korea’s recent missile tests failed to gain the major attention as the virus fears are stronger enough to weigh on the global economy and drag the energy demand. In its latest piece, China’s Caixin raised worries relating to the travel and service freeze while citing downbeat export demand.

Market’s risk-tone also remains heavy with the US stock futures down nearly 2.0% after US President Donald Trump extends the social distancing guidelines through April 30.

Oil traders may continue to witness further downside amid expectations of demand depletion. Alternatively, the market-players may await supply restrictions for fresh buying.

Technical analysis

The buyers need to conquer March 11 top near $36.65 to renew market sentiment. Until then, odds signaling the oil benchmark’s drop below $20.00 remain on the cards.