WTI Crude Oil Soars Amid Reports of Increased Demand from China
Arslan Butt • 2 min read
During Friday’s Asian trading hours, WTI crude oil prices were mixed and faced rejection from the 6-week high above $28.20 and erased some of their gains to $27.71, representing 1% losses on the day, mainly due to renewed fears of the second wave of coronavirus in most of the countries after easing lockdown which keeps traders cautious.
Alternatively, the previous session’s gains could be attributed to the promises from Gulf countries to stimulate the Great Rebalancing by further trimming their oil sales. Saudi Arabia’s decision to cut deeper into their oil production also favored oil prices. At press time, WTI crude oil futures are currently trading at 28.61 and consolidating in the range between 27.23 and 28.75.
We have forgotten to mention this above that the data recently showed growth in the demand for crude oil in China, mainly after the easing lockdowns, which were implied to stop the coronavirus outbreak. As a result, the hopes got strong that the global supply overhang may start to fade.
WTI Crude Oil moved up 19 cents, or 0.7%, at $27.75 a barrel, having surged 9% in the previous session. WTI is going for a third weekly increase, up more than 12%. Despite this, the markets are still cautious, as the world death rate rose above a bleak milestone of 300k. Whereas, China has just reported 11 new asymptomatic coronavirus cases in the Mainland as of May 14.
The International Energy Agency said it anticipates crude inventories to drop by about 5.5 million barrels per day (BPD) in the second quarter of this year. In the meantime, US crude inventories declined for the first time in 15 weeks, the Energy Information Administration said on Wednesday. Moving on, WTI crude oil could struggle to break above the $30 level until or unless the economic outlook improves for the US, and some of the downside risks reduce.
The investors’ confusing sentiment could also be attributed to the US Labor Department statement that 2.98 million Americans claimed unemployment benefits for the week ended May 9, down from the previous week’s 3.18 million and the sixth straight reported weekly drop, while approximately 36 million Americans have lost their jobs since the end of March.
Daily Support and Resistance
Pivot Point 25.98
US oil has violated the ascending triangle pattern, which was providing resistance at 26.85 level, and bullish crossover of this level may extend buying until 29.26 and 30.50. The RSI and MACD are still suggesting bullish bias in US oil.