WTI bears dominate below $11 as risk-off continues, EIA data eyed
- WTI fails to hold onto the early-Asian recoveries.
- OPEC+ couldn’t agree to fresh policy moves, the Bloomberg Commodity Index drops to the lowest since 1974.
- US diplomats show concern for oil’s declines, Aussie Energy Minister said to set up a strategic reserve.
- Coronavirus carnage continues despite US President Trump’s efforts to placate traders, EIA data awaited.
Following a brief pullback during the Asian session, WTI sellers return to the desks as the black gold drops to $10.60, down over 18% on a day, as risk aversion regains momentum ahead of the European session on Wednesday.
The drop in the Bloomberg Commodity Index to the lowest since 1974 as well as the inability of the OPEC+ members to agree on fresh policy moves could be cited as the key catalyst for the recent declines.
Earlier, news that the Hong Kong's Samsung S&P GSCI Crude Oil ER Futures ETF dropped 45% so far grabbed the headlines together with the CME’s introduction of options for the negative prices.
Even so, policymakers in the US, Australia and Iraq are suggesting efforts to placate oil traders while expectations of the US economic restart and aid package check the bears.
It should also be noted that the broad risk aversion wave, mainly due to the coronavirus carnage, keeps the oil prices under pressure. While portraying the risk-off, US 10-year Treasury yields add two basis points (bps) to the previous day’s loss of four bps, to 0.55%, whereas stocks in Asia.
Looking forward, the weekly official Crude Oil Stocks Change from the Energy Information Administration (EIA), expected 16.133 million barrels versus 19.248 million barrels, will be the key to watch.
Technical analysis
In addition to the March month bottom close to $19.25, 21-day SMA around $20.60 also limits the energy benchmark’s immediate upside. Alternatively, sellers may target $10 psychological mark as immediate support ahead of plunging towards near zero levels.