Oil Moves Higher Ahead of Inventories
So far this week WTI recovered some of the losses from last week when it was hit by the corona panic. Earlier today it was trading above 48$ per barrel. The market is currently in contango meaning that futures prices are higher than spot prices. This gives physical oil traders an incentive to hold oil in storage, as they can sell it for a higher price in the future.
Markets are expecting OPEC to introduce further output cuts to tackle the current oversupply of the market and the lower demand due to corona virus economic effects. Saudi Arabia so far has pushed for even bigger cuts with talks of over 1mln barrels per day. Should these materialize and member states comply with them, we can see potential upside for the commodity.
Yesterday the API Weekly Crude Oil Stock showed a build of 1.690mln.
The expectation for today's EIA Crude Oil Inventories is for a build of 2.644mln.
WTI Daily Chart
A drop in inventories today could potentially push WTI towards 49$ per barrel.
A bigger than expected build in inventories, could send the price down.
Next potential resistance levels lie at 49 and 50 handles. Also the June 2019 low of 50.60.
Potential support levels are this week's low of 43.35 and the 2018 low of 42.60 along with the handles above these prices.