WTI oil probes again below critical $20 support on gloomy outlook due to strong fall in demand
WTI oil price extends steep descend into fourth day and probes again below critical $20 support zone on Wednesday.
Fresh weakness cracked previous low at $19.24 (30 Mar) and hit new lowest in over 18 years ($19.17 so far).
As mentioned in my previous reports, near-term risk was clearly at the downside after recovery on renewed but short-lived optimism stalled on approach to psychological $30 barrier.
Oil price remained under strong pressure during past two weeks despite efforts of main world oil exporters to reduce production and try to stabilize oil market, hit badly by strong drop in demand due to coronavirus closure that brought global demand almost to a halt.
It seems that agreed reduction of 9.7 million bpd was inadequate to fight slumping global demand as sentiment remained negative and worsened by today’s report of International Energy Agency which estimated that global demand is likely to drop bpd 9.3 million bpd in 2020.
Demand in April is expected to be lower 29 million bpd lower (falling to the levels last seen in 1995) compared to the same period last year, with expectations for slight improvement in the second half of the year.
Fresh probes below $20 level will be watched closely as this marks critical support zone, loss of which would spark strong bearish acceleration towards $10 per barrel.
Perhaps further hesitation to clearly break lower could be anticipated and unless OPEC+ group doesn’t come with new decisions for stronger production cut, the price may hold in extended range around $20 level before finally breaks lower.
There are no significant barriers until $23.00/70 zone and only break her would sideline downside risk.
Res: 20.00; 20.86; 21.57; 23.01
Sup: 17.17; 19.00; 18.00; 16.91