WTI refreshes seven-week low to $56.05 after API data, EIA numbers in focus
- WTI drops heavily amid fears of weak demand, higher supply.
- An increase in API inventories, diminishing importance of the geopolitical plays in the Middle East also played their roles.
- EIA data, trade/political headlines will be in the spotlight for now.
Following the end of the settlement period for Wednesday, WTI was down more than 3.7% with a low of $56.05. Prices have recently dropped amid concerns of depleting demand and a rise in supply while also undermining geopolitical tension from the Middle East.
Be it the outbreak of China’s coronavirus or likely trade tussle between the US and Europe, not to forget the strength of the US dollar, all of them negatively affected the energy benchmark during the previous day.
Also exerting downside pressure was the weekly release Crude Oil Stock data from the American Petroleum Institute (API). The data for the week ended on January 17 suggest oil inventories rose by 1.6M versus the previous increase of 1.1M.
During the early week, the US EIA (Energy Information Administration) report forecasted new well oil production per rig at 1,598 barrels per day (bpd) for Bakken versus 1,559 bpd month ago. This follows the International Energy Agency’s (IEA) forecast of one million bpd of oil surplus during the first half of 2020.
It should also be noted that geopolitical threats from Libya, Iraq and Iran are likely failing to entertain the energy traders off-late.
Markets will now focus on the official oil stock report from the EIA, up for publishing at 16:00 GMT. The inventory numbers concerning the week ended on January 17 indicate a decline of -1.117M bpd versus -2.549M bpd prior to the oil stockpile.
Technical Analysis
Given the black gold’s price break below 200-day SMA level of $57.65 as well as an upward sloping trend line since early October, at $58.40 now, the bears will target November month lows surrounding $54.90 during the further declines.