- WTI is set to end lower for a second week running, with traders citing this week’s IEA reserve release announcements.
- WTI currently trades a tad lower on the day in the $96.00s after nearly hitting March lows on Thursday.
- Technical selling after breaking below a long-term pennant could see WTI test $90, but fundamentals would likely then be supportive.
Oil prices were on the back foot on Friday, with front-month WTI futures set to close out a second successive weekend in the red after coming within a whisker of hitting March lows at $93.56 on Friday. At current levels in the mid-$96.00s, WTI is down about half a buck on the day, and just shy of $3.0 on the week.
Market commentators have cited announcements throughout the week from IEA nations of crude oil reserve release plans as weighing on crude oil market sentiment. In total, 240M barrels will be released in the coming months, which strategists say eases concerns about an acute shortage of oil in the near term.
That has overshadowed geopolitical developments, which have seen the EU move to expand sanctions on Russian energy imports, though not yet place an outright ban on oil and gas imports. As political pressure in the EU on a full Russia import energy embargo build, this could present an upside risk to WTI in the coming weeks.
So could the continued lack of progress in indirect US/Iran negotiations on a return to the 2015 nuclear pact that could release as much as 1.3M barrels per day in sanctioned oil exports, as well as OPEC+ reluctance to open the taps. Strategists have argued that recent reserve release announcements make a faster pace of output hike’s from the cartel significantly less likely in the coming months.
For now, though, the sellers have the upper hand, and technicals might be playing a part. WTI broke below a key long-term pennant that had been squeezing the price action earlier in the week, with some technicians taking this as a sign that WTI will fall back towards support in the $90 area. Amid the above-mentioned ongoing risks, an even deeper pullback at this stage seems unlikely.