WTI: Bears relentless amid scarce storage, $10 mark back in sight
- WTI sell-off resumes starting out a fresh week on Monday.
- Bearish fundamentals weigh, with global storage at a tipping point.
- Global stimulus hopes driven risk-on fails to impress the oil bulls.
The WTI (June futures on Nymex) bearish momentum has resumed so far this Monday, down already $4 or 20% from last week’s high of $18.26. The US oil, currently, trades at 14.30, shedding about 15.50% on a daily basis.
The sellers are back with pomp and show, as scarce storage capacity remains a reality amid evaporating demand, which affected by the coronavirus outbreak led economic contraction. Therefore, persisting oversupply and storage concerns will continue to exert the downside pressure on the black gold.
US traders fear that storage at Cushing, Oklahoma, could reach full capacity soon, as cited by Reuters. Meanwhile, the increase in the US crude inventories also aggravates the supply glut scenario, rendering oil-negative. The US crude stocks rose to 518.6 million barrels in the week to April 17, near an all-time record of 535 million barrels set in 2017.
Amid the relentless selling in oil futures, markets appear to pay little heed to the positive headlines flowing in from Russia. Russian Energy Minister Novak said that central and North Europe show rising oil demand. Further, Reuters reported, citing sources, the Russian mid-sized oil firm Tafneft cut its oil output by around 17% so far in April.
From a technical perspective, with the 5-DMA support of 15.62 caved in, the bears now target the 10-DMA at 10.85. A break below the latter would open doors for a test of the psychological 10.00 level. Going forward, any recovery is likely to be short-lived, with no silver lining still seen in the oil-price trading.