WTI pays a little heed to demand-supply matrix, stays positive above $50

• WTI registers a two-day winning streak.
• Upbeat sentiment surrounding coronavirus, cautious optimism of global central bankers keep energy buyers hopeful.
• EIA’s lower oil price forecasts, increase in API inventories seem largely ignored.
• Eyes on weekly EIA inventories for now.

WTI holds onto recovery gains while taking the bids to $50.70 during early Wednesday. The black gold recently ignored the Energy Information Administration’s (EIA) 2020 oil demand and price forecasts while also paid a little heed to the weekly inventory data from the private provider, namely the American Petroleum Institute (API).

The EIA cut its global oil demand growth forecast for this year by 310,000 barrels per day (bpd) as the coronavirus outbreak dents oil consumption in China, the world’s No. 2 economy, said Reuters. Further, the API data suggested an increase of 6 million barrels to the stockpile for the week ended on February 07 versus 4.18 million barrels prior.

The recovery could be traced to the shift in the market’s risk-tone due to the diminishing rate of coronavirus infections. Also increasing the optimism could be cautiously optimistic comments from the central bankers, the Fed Chair, the RBNZ could be cited as the recently notable among them.

It should also be noted that the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia are on their way to extending the global supply cuts, which in turn offers price positive signals.

Oil traders will now gear up for the weekly official stockpile data from the EIA, up for publishing on 15:30 GMT. The inventory numbers for the period ending on February 07 are likely to step back from 3.355M prior to 2.931M.

Technical Analysis

10-day SMA surrounding $50.80 acts as the closest resistance ahead of the monthly top near $52.30. On the downside, the oil benchmark’s drop beneath $49.40 will drag it further south towards $48.00.