WTI fails to cheer OPEC+ agreement, drops below $23.00

WTI fails to cheer the oil output cut accord by the major producers as the black gold slips to $22.50, with an intraday low of $21.96, by the early Asian session on Monday. In doing so, the oil benchmark might have taken clues from the macro risk-off amid the coronavirus (COVID-19) crisis.

Read: What You Need to Know: WTI could be ignited on OPEC+ accord, but demand shock weighs

The OPEC (Organization of the Petroleum Exporting Countries) and its allies including Russia, the US and Canada, mostly known as OPEC+, recently agreed to scale back their oil productions to balance the latest price weakness. The oil majors agreed to reduce output by 9.7 million barrels per day for May-June after a compromise with Mexico, two OPEC+ sources said.

Following the agreement, leaders from the US, Saudi Arabia and Russia expressed comforts with the decision while Canadian Energy Minister welcomed the decision of the group. Further, Iraq’s Oil Minister also praised the outcome and said the same will help to stabilize the market.

On the other hand, the coronavirus pandemic has been weighing on the market’s risk-tone. The latest fatalities have been sparking in the world’s largest economy the US, which in turn raises the fears of weak energy demand. While portraying the risk-tone, S&P 500 Futures mark 1.9% losses to 2,733 by the time of writing.

Although most markets are close due to Easter Monday, updates from the International Energy Agency (IEA) as well as any more clarification on the deal, will be important to watch.

Technical analysis

While sustained trading below $20 will give additional strength to the sellers, buyers will look for entry only beyond $29.00, which surpasses the monthly top.