- WTI trades in the red and risks falling under $20.
- Saudi Arabia has cut its selling price for Asian customers.
- API inventory report released Tuesday showed extent of demand destruction due to virus outbreak.
West Texas Intermediate (WTI) oil is operating on slippery grounds at press time, having faced rejection at $20.80 during the overnight trade.
A barrel of black gold is currently changing hands at $20.30, representing a 1.5% decline on the day.
Prices printed a low of $19.92 on Tuesday after Saudi Arabia slashed its official selling price for Asian customers for May in a bid to capture market share before output cuts take effect from May 1. Further, fears of a coronavirus-led recession overshadowed the recently reached OPEC+ output cut deal and added to bearish pressures around WTI.
These factors, along with the bearish API inventory report, are likely keeping oil prices under pressure in Asia. The American Petroleum Institute on Tuesday predicted a large crude oil inventory build of 13.143 million barrels for the week ending April 10 compared to expectations for 11.676 million barrels.
The surge in inventory is an evidence of the demand destruction caused by the coronavirus pandemic and reinforces analysts’ belief that the OPEC+ output cut deal won’t be enough to rebalance the oil market.
Technical levels
Resistance: $22.80 (overnight high), $22 (hourly chart hurdle).
Support: $19.92 (Tuesday's low), $19.00 (psyhcological support).
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