WTI: Mildly positive despite coronavirus-led risk aversion
- WTI extends recovery gains, recently off high, amid risk-off markets following heavy API inventory build.
- China’s Caixin PMI followed the footsteps of official activity data in flashing upbeat marks.
- The Trump-Putin talk suggested the leaders are concerned over oil prices.
- EIA data, virus headlines in the spotlight.
Despite growing worries concerning the coronavirus (COVID-19), WTI manages to stay away from the 18-year low, flashed on Monday, while taking rounds to $20.50 amid early Wednesday.
China’s Caixin Manufacturing PMI crossed 46.00 forecast and 40.3 prior with 50.1 mark during March. The private data seems to take clues from the latest official figures that suggested a noticeable recovery in Chinese activity numbers.
Contrast to Chinese data, private inventory numbers from the US signal a heavy build and weigh on the energy prices. The American Petroleum Institute's (API) Weekly Crude Oil Stock data, published on late-Tuesday in the US, marked a surge of 10.485 million barrels for the week ending March 28 versus the previous draw of -1.25 million barrels.
Oil traders can argue that the Trump-Putin call and the US signals to lease space to energy companies as favoring the black gold’s latest pullback. Reuters recently said that the US Department of Energy plans to announce as soon as Wednesday it will allow oil companies to lease space in the emergency oil reserve, as it seeks to comply with President Donald Trump’s directive to fill the facility to capacity, two industry sources said.
Even so, the early-Asian warning from US President Donald Trump as well as pessimistic forecasts on the Q2 2020 GDP, due to the coronavirus pandemic, keep weighing on the commodity.
Looking forward, the weekly official inventory data from the Energy Information Administration (EIA) and virus headlines will be the key to watch for near-term direction.
Bears keep dominating unless breaking the previous week’s top surrounding $25.20.