Oil turns positive, reversing more than 20% loss in early trading

[Sergey Golubev]

Oil pares losses after falling more than 21% in early trading

Oil moved lower on Tuesday amid intensifying fears about dwindling storage capacity worldwide, but prices bounced from the lowest levels of the day in mid-morning trading.

West Texas Intermediate futures for June slipped 3.4% to trade at $12.34 per barrel, while international benchmark Brent crude traded 82 cents, or 4.1%, higher at $20.81. Earlier WTI had been down more than 20%, touching a session low of $10.07. On Monday, WTI fell 24.56%, or $4.16, to settle at $12.78 per barrel. Brent crude fell 6.76% to settle at $19.99. Each contract is coming off its eighth week of losses in nine weeks.

“The June contract is falling due to the reality of demand levels being well below current production levels and limited storage options,” Reid Morrison, PwC oil and gas advisory leader, told CNBC. “Choppiness in the markets will be significant as economies deal with lockdowns and returning to normal,” he added.

Earlier in April, OPEC and its oil-producing allies agreed to a record production cut that will take 9.7 million barrels per day off the market beginning Friday, while Exxon and Chevron are among the U.S.-based companies that have scaled back operations.

But sill, Birch noted that even as crude prices have dropped U.S. oil production held at a record level in the first quarter of 2020, “filling up almost all available storage capacity.”

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The chart was made with Ichimoku market condition setup (MT5) from this post (free to download for indicators and template) as well as the following indicators from CodeBase:

• MaksiGen_Range_Move MTF - indicator for MetaTrader 5
• Price prediction by Nearest Neighbor found by a weighted correlation coefficient - indicator for MetaTrader 5