WTI holds in bullish territory on Chinese demand and OPEC hopes
- WTI bulls are back in charge taking the price into positive territory.
- OPEC and China are among the positives while supply-side risks and the COVID-19 spread caps the optimism.
The price of West Texas Intermediate crude, WTI, is currently trading at $40.96 and is trading between a low of $39.85 and $41.40.
WTI is partly recovering from losses of more than 4% earlier in the week which commenced on the back of news flows surrounding Libya's oil exports coming back online.
More supply is the last thing that the market needs at a time when COVID-19 cases are on the rise across the US and Europe and all the while geopolitics continue to dampen risk appetite.
However, prices have been buoyed by strong demand from China where crude oil imports rose 17.6% y/y to 48.5mt.
''Ample import quotas are driving demand for imports and are likely to keep volumes high through to the end of the year. Investors were also encouraged by strong car sales in the country. Passenger vehicle sales jumped 7.4% y/y to 1.94m units in September, according to the China Passenger Car Association,'' analysts at ANZ bank explained.
However, recent warnings from the IEA of expectations of further risks to demand is likely to keep a lid on the black gold. The IEA explained that oil demand may take years to recover and will peak at a lower level.
''US election risks surrounding energy policy are in focus, as a Biden Presidency may seek to kickstart a transition towards green energy, which may have long-term implications for oil demand,'' analysts at TD Securities explained.
''Significant uncertainty also remains concerning near-term domestic and international energy policy, particularly surrounding the Iran nuclear deal and fracking policy.''
Bullish prospects on OPEC
On the more positive outlook, the analysts at TD securities have cited ongoing normalization of demand expectations and OPEC+ signalling a willingness to revise their planned tapering of the historic output deal continues to offer strong support in energy markets.
WTI levels