After several weeks of moving in a sideways range, WTI continues to trade nearby $100 per barrel. Traders have a lot of information to digest at the moment, as geopolitical tensions, post pandemic issues and supply demand constrains continue to drive the market. In this outlook we aim to highlight the most important subjects relating to the Oil market and their potential of creating volatility. We will also provide a WTI technical analysis to support traders with a complete report on both technical and fundamental information.
During the past days, weekly US Oil market data created volatility for WTI once again reminding market participants that the releases should not be taken lightly. On Tuesday the 26th of April the American Petroleum Institute inventory levels indicated stocks where in a surplus of 4.78M barrels. Minutes after the release WTI’s price dropped approximately $0.50. Moreover, on the 27th of April during the important Energy Information Administration’s (EIA) Crude Oil Inventories release, a minor surplus of 0.70M barrels was indicated. Due to the fact that the market expected a notable surplus of 2M barrels, the figure did not go unnoticed and WTI rose nearby $1 upon release. The market seems to respond more forcefully to figures that do not match the forecasted ones. Thus, we would advise traders to keep an eye on the releases in the next week.
At the moment, Oil traders are constantly monitoring developments in China as after Shanghai, Beijing is now increasing COVID-19 restrictions. China, the world’s biggest oil importer has the potential to destabilize supply and demand ends and create substantial volatility within the Oil market. In the scenario of a general lockdown in Beijing we could see Oil prices tumbling. On the other hand, a partial lockdown can create some bearish tendencies for WTI but perhaps not as strong as the first scenario. Major media sites and sources are expected to cover for any updates on the specific subject thus traders are advised to be mindful of unexpected market reactions.
Finally, as a lot of speculation over OPEC’s next steps is reiterated among market participants, we would like to make a brief reference to the upcoming OPEC+ meeting on the 5th of May. Despite the Oil market being under immense uncertainty with the subjects detailed in the report, OPEC plus is expected to agree another 432,000 barrel per day oil output increase for June. Any change in the output figure could create notable volatility yet OPEC’s views on the major geopolitical subjects at the moment can be very interesting also for traders.