Prices of West Texas Intermediate rose over 5 percent on Wednesday, however, the follow-through has been weak in Asia
Prices of West Texas Intermediate showed signs of life on Wednesday by rising over 5 percent. So far, however, the follow-through has been weak in Asia.
At one time, a barrel of black gold was changing hands at $21.20. Prices hit a low of $21.45 early Thursday.
Prices may need to fall below $10 to rebalance the market, which is currently oversupplied and witnessing unprecedented demand destruction, according to Morgan Stanley analysts.
WTI fell by over 65 percent in the first quarter as the coronavirus outbreak brought the global economic activity to a near standstill. Most analysts expect the economic depression to last through the rest of the year.
Put simply, the demand side is likely to remain weak. Hence, there is consensus in the market that prices would need to drop to such low levels that it forces out existing physical supply.
President Trump is scheduled to meet heads of some of the largest U.S. oil companies on Friday to discuss measures to help the industry weather an unprecedented oil crash, according to Wallstreet Journal.
Meanwhile, the White House National Security Adviser Robert O’Brien said that the US will work with the world’s largest oil producers to address volatility, according to Reuters.
Also, President Trump on Wednesday threatened that Iran will pay a heavy price if the Islamic nation conducts a ‘sneak attack’ on US troops in Iraq.
Battered WTI, therefore, could pick a bid during the day ahead. The focus, however, would shift back to growth concerns if the US weekly jobless claims hit a record high, as anticipated by economists.