Oil Price Forecast: WTI choppy around $25.50 ahead of EIA data
- WTI wavers in a range while the bearish grip persists.
- Second coronavirus wave fears offsets voluntary output cuts.
- Rising US crude stockpiles a worry, as focus shifts to EIA data.
WTI (June futures on Nymex) is posting mild losses on the 25 level so far this Wednesday’s European trading, lacking a clear directional bias ahead of the critical US Energy Information Administration (EIA) Crude Stocks Change data.
The black gold hovers around 25.50, down 0.90%, at the time of writing, having hit a daily low of 25.07 and a high at 25.79. Despite the choppy trend, oil traders consolidate the recent rally to near 26.25, suggesting a bullish sign in the coming days.
The buyers lost control after the fears over the second wave of the coronavirus infections firmed up, especially in China and South Korea. Global Times reported that a city in Jilin province declared wartime control mode after an infected laundrywoman spread the virus to 11 others, raising prospects of another wave of infections. The virus-induced lockdowns have already stunted the global economic growth and the demand for oil.
Further, mounting US-China tensions, in lieu of Beijing’s virus outbreak mishandling and Trump administration’s order to halt the planned China stocks investment, dent the sentiment towards the higher-yielding assets such as oil.
The expectations of rising US crude stockpiles are also weighing on the barrel of WTI. The latest American Petroleum Institute (API) data showed on Tuesday, US crude oil rose by 7.6 million barrels last week to 526.2 million barrels, against expectations for an increase of 4.1 million barrels, as cited by Reuters.
On Tuesday, WTI rallied nearly 7% on reports of voluntary output cuts panned out by OPEC’s top oil producers in June. Saudi Arabia pledged to cut output by a further 1 million barrels per day (bpd) in June while UAE and Kuwait offered to cut extra 180,000 bpd in total next month.
WTI technical levels to watch
Should the bears manage to take out the 25 level, the next supports are aligned at 24.76 (5-DMA) and 24.22 (May 12 low). Conversely, buyers aim for a sustained move above $26 mark for the recovery rally from the historic slump to regain momentum, with the contract high of 26.74 back in sight.