WTI: Bulls continue to guard $10 mark, still down 15% ahead of API

• WTI sell-off extends, as bears remain relentless.
• Storage capacity fears and economic contraction weigh.
• June contract low back in sight ahead of API data.

WTI (June futures on Nymex) has come under fresh selling pressure in the European session, as the bears now look to test the contract low of $6.55 on a break below the $10 psychological level.

The oil rout extends into a second straight day this Tuesday after the recovery from historic lows fizzled out just above $18 last week. The US oil, currently, trades at 10.88, losing about 15% on a daily basis.

Despite a mild recovery in the risk sentiment, reflective of the bounce in the European equities and S&P 500 futures, the bearish pressure around the black gold remains intact amid worries over deepening economic contraction even though there are plans of lockdowns easing globally.

The oil demand-supply scenarios remain bearish and continue to emerge as the main catalyst behind the oil-price slump. In the absence of global oil demand, the oversupply situation worsens, with limited capacity to store crude oil worldwide.

Meanwhile, the latest decline in the US oil can be attributed to a lack of demand for the retail investment vehicles like exchange-traded funds of the front-month June contract, especially in light of record losses seen last week, as cited by strategists.

The latest comments from the Russian Energy Minister Alexander Novak also does little to offer any reprieve to oil bulls. Novak said oil prices won’t recover quickly as the storage is full.

Technically, sellers now target the 10-DMA at 9.75 should the $10 mark cave in. Meanwhile, the recovery will likely only gather steam above the daily pivot point at 13.88.