WTI struggles around $20.00, dropped earlier on huge API build

WTI bounces off fresh 18+ years low while taking rounds to $20.00 amid the early Wednesday morning in Asia. Even so, the energy benchmark remains under pressure amid increasing supply and likely reduction in demand.

The latest catalyst comes from the American Petroleum Institute's (API) Weekly Crude Oil Stock data that surged by 10.485 million barrels for the week ending March 28 versus the previous draw of -1.25 million barrels. Also contributing to the black gold’s weakness could be March output data for the Organization of the Petroleum Exporting Countries (OPEC). As per the Reuters, the cartel marked an increase of 90,000 barrels per day (bpd) in output to 27.93 million bpd in March.

Not only supply increase but fears of demand reduction, mainly due to the coronavirus (COVID-19) also exert downside pressure on the oil prices. The increase in the numbers of cases from the US and Europe join the latest threat by US President Donald Trump weigh on market’s risk-tone.

That said, the US 10-year treasury yields and Wall Street closed Tuesday on the negative side whereas the US stock futures are flashing losses near to 1.0% by the press time.

Oil traders will now focus on the official inventory data from the Energy Information Administration (EIA) on 14:30 GMT, prior 1.623M, for fresh impulse. That doesn’t mean updates concerning the demand-supply matrix and virus news will lose its importance to move the markets.

Technical analysis

Bears hold the reins unless oil prices cross the previous week’s top surrounding $25.20.