WTI breaks below daily consolidation channel, drops toward $42
- WTI came under renewed bearish pressure in American session.
- IEA expects a decline of 8.1 million bpd in global oil demand in 2020.
- Focus shifts to key macroeconomic data releases from China.
Crude oil prices came under renewed selling pressure during the American trading hours and the barrel of West Texas Intermediate (WTI) dropped to a daily low of $42.10. As of writing, the WTI was down 0.7% on a daily basis at $42.23.
Earlier in the day, the International Energy Agency (IEA) in its monthly report announced that it revised down the 2021 crude oil demand estimate by 240,000 barrels per day to 97.1 million barrels per day. The IEA further noted that it sees the global oil demand declining by 8.1 million barrels per day in 2020 due to poor jet fuel demand. "The upsurge in COVID-19 cases has prompted a downgrade of the H2 demand estimate for gasoline," the IEA explained.
Focus shifts to key data from China
Meanwhile, Israel and the United Arab Emirates announced that they have reached a deal to "normalize relations" between those two countries. "As part of the agreement, Israel has agreed to suspend applying sovereignty to areas of the West Bank that it had been discussing annexing," a White House official told reporters. Following this development, easing geopolitical tensions in the Middle East seem to be putting additional weight on crude oil prices.
On Friday, Industrial Production and Retail Sales data from China will be looked upon for fresh impetus. If these figures show that the economic recovery in the world's second oil consumer is picking up pace, the WTI could gain traction and target $43 ahead of the weekend. Later in the day, Baker Hughes Energy Services will release its weekly US Oil Rig Count data.
Technical levels to watch for