WTI snaps three-day winning streak

• WTI oil dropped on Monday on oversupply concerns. 
• Production cuts by OPEC and Russia are unlikely to help rebalance oil markets. 

West Texas Intermediate (WTI) oil fell by over 8% on Monday, ending a three-day winning streak, which saw prices rise from $19.94 to $29.11. 

The black gold fell as Saudi Arabia and Russia's decision to delay an emergency meeting to discuss output cuts shifted focus back to oversupply concerns, which were bolstered after Genscape reported that inventories at the Cushing storage hub in Oklahoma, the delivery point for WTI, rose by about 5.8 million barrels last week. 

If the U.S. Energy Information Administration data on Wednesday confirms Genscape's figures, it would be the fifth straight weekly inventory build at the hub and the biggest weekly rise since 2004. 

Prices rallied sharply last week after President Trump said he had brokered a deal between Saudi Arabia and Russia to cut output. The Kingdom, along with its OPEC allies and Russia, was scheduled to discuss output cuts on Monday. The meeting, however, was postponed to Thursday.

A majority of analysts are of the opinion that oil markets would remain oversupplied even if the group agrees to cut output by 15 million barrels per day. The coronavirus outbreak across the globe has brought unprecedented demand destruction and prices may need to go as low as $10 or below to rebalance the market. 

At press time, a barrel of WTI is changing hands near $26.86, representing a 2% gain on the day. 

Technical levels

Resistance: $28.22 (lower high on the hourly chart), $29.11 (April 3 high)

Support: $25.89 (Monday's low), $25.56 (ascending 5-day average)