WTI under pressure near $22.00 /bbl
- Prices of the WTI tumble below $21.00/bbl on Monday.
- Russia-Saudi Arabia price war remains in centre stage.
- Demand shock from the coronavirus keeps prices depressed.
Prices of the American benchmark for the sweet light crude oil have started the week on the defensive, adding to Friday’s pullback and revisiting the sub-$21.00 area.
WTI focused on supply/demand drivers
The barrel of WTI is down for the second session in a row at the beginning of the week, fading further last Thursday’s uptick and refocusing on the lower bound of the recent range around the $20.00 mark.
In the meantime, the status quo around the commodity stays unchanged for the time being, where the Russia-Saudi Arabia price war on the supply side coupled with the impact on global growth of the COVID-19 on the demand side keep exerting heavy downside pressure on prices.
Usual docket regarding oil, with the API and EIA weekly reports on US oil supplies due on Tuesday and Wednesday, respectively. Last Friday, driller Baker Hughes reported US oil rig count went down by 19 oil rigs, taking the active oil rigs to 664.
What to look for around WTI
Crude oil prices remain under heavy pressure in a context of heightened volatility and thin liquidity. As usual, in the past weeks, prices of the commodity are hurt by a combination of demand and supply side drivers coming from the ongoing (and future) impact of the coronavirus on the global economy and the unabated Saudi Arabia-Russia price war, aggravated by the palpable possibility that the Kingdom could ramp up production to a record of 12.3Mbpd as soon as in April. A potential relief to this low-prices-scenario could come in the form of a US intervention, which is expected to morph into some sort of agreement between the US, Russia and Saudi Arabia, all aimed to bring in stabilization to the oil market. This option, however, appears quite a long shot for now.
WTI significant levels
At the moment the barrel of WTI is retreating 3.91% at $22.49 and a breach of $20.08 (2020 low Mar.18) would expose $17.12 (monthly low November 2001) and finally $10.65 (monthly low December 1998). On the upside, the next resistance aligns at $28.46 (high Mar.20) seconded by $36.28 (high Mar.11) and finally $37.35 (21-day SMA).