WTI recovers 35% from 17-year lows, not out of the woods yet
- Trump’s and Kremlin’s comments save the day for the oil bulls.
- Global stimulus measures offer some respite, as WTI recovers further.
- Saudi-Russia price war, broad USD rally to keep a check on oil recovery.
WTI (oil futures on NYMEX) stages solid comeback from almost two-decade lows of $20.54, now adding 9% to the recovery gains, as the bulls manage to regain the 28 handle in Friday’s European trading. At the press time, the US oil trades at 28.15, having hit a three-day high of 28.48 in the last hour.
The recovery in the black gold gained further traction over the last hour after Kremlin said in its statement that there is no price war between Russia and Saudi Arabia while Goldman Sachs’ upbeat remarks on the price outlook also offered some support to the prices.
The barrel of WTI pulled-off the reversal from multi-year lows on Thursday after US President Trump hinted he may intervene in the Saudi Arabia- Russia price war at an “appropriate time”. The price war between the two oil giants is likely flooding markets worldwide with cheap oil that has led to the recent collapse in the prices.
The bulls were further offered respite by US’ plans to buy up to 30 million barrels of crude oil for its emergency stockpile by the end of June. Also, the global coordinated economic stimulus temporarily calmed fears over an economic downturn, which eventually eased oil demand growth concerns.
However, industry experts see the rebound as a brief reprieve, anticipating more weakness as the coronavirus outbreak takes its toll on global demand. Therefore, any recovery in the prices is likely to be short-lived and could be an opportunity for ‘Sell the rallies’ trading.
Looking ahead, oil markets will take fresh cues from the Bakers Hughes US Oil Rigs Count data while the broader market sentiment and dollar dynamics will continue to play a pivotal role.
WTI Technical levels to consider