WTI elevated despite demand side risks, bulls test $41.00

WTI is currently trading at $40.90 between the start of the week's range of $40.74 and $41.11 following a rather dull end to the week on Friday. 

We have conflicting signals in the market.

The demand side concerns stem from the spread of the coronavirus far and wide of Europe and also in the United States. 

''Given how prone energy demand is to the nature of pandemic lockdowns, it is no surprise that crude prices have not been able to break higher in recent sessions,'' analysts at TD Securities explained. 

 ''But, with that said, the market has held resiliently strong despite the barrage of bearish COVID headlines.''

Sentiment was buoyed by the unexpectedly large drawdown in inventories in the US.

An Energy Information Administration report showed that stockpiles of crude fell 3,818kbbl last week.

Meanwhile, US economic data showing US retails sales were strong in September, while consumer sentiment rose in early October also helped to buoy the markets. 

''However, signs of stronger supply could negate the stronger demand,'' analysts at ANZ bank argued.

''Libya’s National Oil Corp lifted force majeure on its Sharara oil field, which could enable the country to lifts its exports to around 600kb/d. Exports have been virtually non-existent amid a long running civil war. ''

Overall, the resurgence in coronavirus cases leading to new restrictions will continue to hamstring rallies and  will remain the primary risk for energy bulls at the moment.

The latest from the weekend updates is that Paris goes into curfew starting Saturday, while France, Portugal and Italy all had new record daily case numbers. 

''Nonetheless, normalizing demand expectations, the prospect of stimulus and a vaccine post election, along with OPEC+ signaling a willingness to revise their planned tapering of the historic output deal, should all continue to offer strong support in energy markets,'' analysts at TD Securities argued.

WTI levels