- Oil markets are falling as investment sentiment deteriorates.
- Market flows lose weight midweek as treasuries reduce risk appetite.
- WTI falls after hitting three-week highs.
U.S. West Texas Intermediate (WTI) crude fell on Wednesday, cutting off recent gains and ending a three-day winning streak, before falling below $80.00 a barrel. Broad market risk appetite evaporated midweek as investors balked at falling demand for U.S. Treasuries and energy markets grew anxious ahead of U.S. oil production data.
Demand for US Treasuries fell this week, with bid-to-cover ratios falling at key bond auctions. Jittery investors are increasingly concerned about demand for US Treasuries and are withdrawing from risky assets in search of safer pastures. The bid-to-cover rate at Wednesday’s auction of 7-year treasury bonds fell to 2.43 from the previous level of 2.48.
The Organization of the Petroleum Exporting Countries (OPEC) and its extended network of non-member allies, OPEC+, are scheduled to begin meeting online-only this Sunday, June 2, and energy markets widely expect OPEC+ to maintain voluntary production limits of a total of 2.2 million barrels per day, while as the oil cartel struggles to support global oil prices by restricting supply.
Meanwhile, U.S. oil production continues to threaten to curb demand, and barrel traders are eagerly awaiting U.S. oil barrel data due this week.
Economic indicator
Change in crude oil stocks under EIA
The EIA Crude Oil Inventories Report is a weekly measurement of changes in the number of barrels in stocks of crude oil and derivatives, published by the EIA. Energy Information Administration. This report typically generates high price volatility as oil prices impact global economies, most impacting commodity-linked currencies such as the Canadian dollar. Despite its circumscribed impact between currencies, this report tends to influence the price of oil itself and has therefore had a more celebrated impact on WTI futures.
WTI Technical Outlook
On Wednesday, the US WTI price fell below $80.00 per barrel and breached the 200-day exponential moving average (EMA) level of $79.16. Crude oil may end in the red for the first time in four straight trading days, with WTI remaining more than 9% off yearly highs just above $87.00.
