WTI recovery fizzles on coronavirus-led risk-off, EIA data in focus
- WTI fails to hold onto recovery gains from the multi-year low.
- Fears of coronavirus weighing on future demand, higher API build supersede upbeat signals from Russia.
- EIA data, COVID-19 headlines will be the key to watch.
WTI fails to ignore fresh coronavirus headlines while declining to $34.90, down 0.50%, as the European traders prepare for entry on Wednesday. In doing so, the black gold pays a little heed to Russia’s indirect signals of production cut talks with Saudi Arabia. The fall could also be attributed to the American Petroleum Institute (API) data. Energy traders will now keep eyes on the headlines concerning the virus, also from Russia, ahead of the official US Crude Oil Stocks Change from the Energy Information Administration (EIA).
The latest numbers from the US and Japan renew fears that the pandemic will weigh on the global economy more than its imagines. Also highlighting the fears were words from the United Nations Conference on Trade and Development (UNCTAD) that cited fears of $2 trillion losses to the global economy due to the disease.
As a result, the US treasury yields and stock in Asia fail to carry the previous day’s recovery moves. It’s worth mentioning that the US equity futures also took a hit despite Wall Street’s latest run-up.
Reuters rely on the sources to mention that Russia’s Energy Ministry will meet with the country’s oil companies on Wednesday to discuss future cooperation with the Organization of the Petroleum Exporting Countries (OPEC). The key ally to the cartel earlier part ways from dominant Saudi Arabia while citing fears of a virus-led economic slowdown. It’s worth noting that the OPEC+ alliance is expiring on April 01.
The private oil stockpiles’ report for the week ended on March 06 mentioned a build of 6.407 million barrels versus the previous increase of 1.69 million barrels.
While headlines from Russia and on COVID-19 will be the key, oil traders will also pay close attention to the weekly EIA data, expected 1.848M versus 0.785M, for intermediate directions.
Sellers targeting a re-test of $30.00 will look for an entry during sustained trading below the short-term rising trend line, at $34.50 now, whereas buyers can keep aiming to fill the week-start gap under $41.20.