WTI weaker, approaches $23.00 post-EIA

• Prices of the WTI trade on the defensive above $23.00.
• Oversupply, demand concerns keep the commodity depressed.
• The EIA reported a 1.623m barrel build during last week.

Prices of the WTI are fading the optimism seen at the beginning of the week and trade closer to the $23.00 mark per barrel.

WTI focused on price war, COVID-19, data

Following a positive start of the week, prices of the barrel of the American reference for the sweet light crude oil are grinding lower on Wednesday, as oversupply concerns plus the demand shock from the coronavirus keep weighing on traders’ sentiment.

In fact, the Russia-Saudi Arabia price war keeps prices depressed and bullish attempts capped so far, while the impact on the global economy of the fast-spreading COVID-19 keep prices under extra pressure from the demand side.

Ongoing supply/demand concerns among traders have practically ignored any benefit for crude oil prices from the recently clinched agreement between the US government, Democrats and Republicans over a $2 trillion stimulus package to fight the effects on the economy of the coronavirus pandemic.

In the calendar, the EIA’s report showed US crude oil supplies went up by 1.623M barrels during last week, adding to the previous 1.954M barrel build. In addition, supplies at Cushing increased by 0.858 barrels. Additional data from the report showed Distillates Stocks went down by 0.679 barrels and Gasoline Inventories fell by 1.537 barrel.

Late on Tuesday, the API reported a 1.250M barrel drop in US crude oil supplies during last week.

What to wait for around WTI

Crude oil prices remain under heavy pressure in a context of heightened volatility and thin liquidity. As usual in the past weeks, prices of the commodity are hurt by a combination of demand and supply side drivers coming from the ongoing (and future) impact of the coronavirus on the global economy and the unabated Saudi Arabia-Russia price war, aggravated by the palpable possibility that the Kingdom could ramp up production to a record of 12.3Mbpd as soon as in April. A potential relief to this low-prices-scenario could come in the form of a US intervention, which is expected to morph into some sort of agreement between the US, Russia and Saudi Arabia, all aimed to bring in stabilization to the oil market.

WTI significant levels

At the moment the barrel of WTI is retreating 4.13% at $23.32 and a breach of $20.08 (2020 low Mar.18) would expose $17.12 (monthly low November 2001) and finally $10.65 (monthly low December 1998). On the upside, the next resistance aligns at $28.46 (high Mar.20) seconded by $34.84 (21-day SMA) and then $36.28 (high Mar.11).