Oil prices dropped Wednesday, ending a multi-day candle of gains, as investors focused on oversupply risks after U.S. crude inventories rose over expected amid a slump in demand attributable to restrictions to halt the coronavirus spread.
U.S. West Texas Intermediate crude futures dropped up to 2.1% to $24.05 a barrel and had been down 14 cents at $24.41/barrel. West Texas has snapped a five-day winning streak.
Brent prices jumped 13.9% in the earlier session, part of a six-day rise. Traders may be hesitant to increase their purchases of Brent as the contract has climbed too much over the past streak.
Brent’s relative strength index, a technical measure used to trace the future’s trading momentum, was at 72.93 on Wednesday, indicating it’s overbought after the recent gains.
WTI slipped after a report showed U.S. crude inventories climbed 8.4 million barrels last week, more than anticipated, according to information from the American Petroleum Institute late on Tuesday.
Oil prices had gained lately as European and Asian nations had reopened their economies and as producers had axed supply after the demand crunch. However, analysts warned the rebalancing of the market would be uneven.
However, analysts also pointed to comments by U.S. shale producer Diamondback Energy saying it might consider reviving drilling plans if WTI held above $30/barrel as a sign that producers won’t want to close production for long.