WTI in bearish consolidation phase below $53, API data eyed

WTI (oil futures on NYMEX) remains on the back foot below the 53 mark, having failed the recovery attempts above the latter on multiple occasions.

The bears take a breather after Monday’s 4% slump to $52.16, the lowest level since early October. S&P Global Platts quoted a source, as saying that the OPEC is considering extending its ongoing output cuts or even deepening them to stem the excessive oil price declines due to the virus spread. The report appears to cap the downside in the prices for the time being. 

Despite the pause in the week-long rout, the risk remains to the downside amid heightening concerns over the economic impact of the China coronavirus contagion, which could likely dampen the oil demand growth outlook.

The US yield curve has already inverted suggesting increased odds of a US recession, in the face of the coronavirus outbreak. US 3-month/10-yr Treasury curve inverts for the first time since Oct. Further, a broadly firmer US dollar also keeps the black gold under pressure. A stronger greenback makes the USD-denominated oil expensive for the holders in foreign currencies.

Markets now await the US weekly Crude Stocks data from the American Petroleum Institute (API) for near-term trading opportunities in the barrel of WTI. Meanwhile, the risk trends will continue to influence the oil price action amid incoming updates on the China virus epidemic.

WTI Technical levels to consider