U.S. West Texas Intermediate, the U.S. benchmark crude oil rebound has extended since initially respecting the support region of $49.00-20.
Now rising for the second consecutive session, the market bulls are cautiously returning as signs of a slowdown in the number of new cases of COVID-19 — a strain of coronavirus that emerged in Wuhan, China late last year.
The death toll from the Covid-19 outbreak in China topped 1,115 on Wednesday, as the World Health Organization (WHO) warned that countries must not let the epidemic get out of control. There are now more than 44,653 confirmed cases in China.
Also supporting the positive sentiment, news sources reported that Russia would overcome initial reservations to work on deeper output cuts with OPEC. In its monthly report, OPEC said 2020 demand for its crude would average 29.3 million barrels per day, 200,000 bpd less than previously thought.
The report could bolster the cartel’s case that some 600,000 bpd be taken off the market immediately to support prices, which earlier this week was down 22% from the January peak of above $75 for Brent and $65 for WTI.
While OPEC predicted a considerable slump in demand for its oil, the U.S. Energy Information Administration reported a big weekly build in domestic crude inventories.
Crude stockpiles jumped by 7.5 million barrels for the week ended Feb. 7, compared with expectations from analysts for an increase of 3 million barrels.
Gasoline stockpiles fell by 95,000 barrels, versus an expectation for a rise of 550,000 barrels, the EIA said.
At present, the posted inverted hammer is a sign to a potential rebound to $53.80-90, with the immediate target viewed to $$52.45-55.
However, the upside view would be negated, if prices close under $49.00, which in turn would leave a short-term neutral view.