WTI ignores upbeat API data amid growing concerns on demand-supply matrix

• WTI extends pullback from the eight-day high.
• News of likely OPEC+ output cut and a decline in the US shale production growth confronts lower demand forecast.
• Receding geopolitical tension in Syria seems to be the latest one to exert downside pressure.

With the growing uncertainty surrounding the global oil demand-supply matrix, coupled with receding geopolitical tension, WTI extends the latest declines to $54.20 by the press time of early Wednesday.

While demand-side concerns have been fuelled by the talks of a likely production cut by the members of Organization of the Petroleum Exporting Countries and its allies (OPEC+), supply-side news has been affected by Russia’s Energy Minister Alexander Novak’s comments that the US oil production is set to peak out in few years and Goldman Sachs’ forecast of a lower oil output growth by the US shale.

Also exerting the downside pressure is the receding geopolitical tension in the Middle East. The latest tweet from the United States’ (US) President Donald Trump, which marks Syria, should be quoted for the reference. Additionally, doubts over the US-China trade deal becomes an extra worry for the Oil bulls.

Danske Bank seems to have favored the same in their latest reports while saying, “We expect oil prices to remain depressed close to current levels in the coming years mainly due to weak global demand on the back of weak growth, trade tensions and a strong USD. We forecast Brent will average USD65/bbl in Q4 and USD60/bbl in 2020.”

It’s worth mentioning that weekly US oil stocks report by the American Petroleum Institute (API), for the week ended on October 18, weakened to 4.45M versus 10.50M earlier readouts.

While trade/political headlines will keep directing near-term Oil prices, weekly Crude Oil Stocks Change, for the period till October 18, from the that the US Energy Information Administration (EIA) will also be the key to watch. Forecasts suggest the official inventory figure to decline to 1.725M from 9.281M.

Technical Analysis

Not only 21-day Exponential Moving Average (EMA) level around $54.30 but an area including monthly tops and 50-day EMA, near $55.00/10 will also keep WTI prices under check before highlighting 100-day EMA level close to $56.00. On the downside, WTI’s declines below a monthly rising trend line around $52.20 could recall $50.50 back to the chart.