WTI gains 3.7% in Asia, but oversupply conditions persist

• WTI looks trapped in a sideways channel, having hit highs above $16 on Wednesday. 
• Output cut by the OPEC+ countries is unlikely to rebalance the market.

The West Texas Intermediate (WTI) oil is trading near $14.25 per barrel at press time, representing a 3.7 percent gain in Asia. 

While the black gold is flashing green, it is still trapped in a sideways channel established during the US trading hours on Wednesday. The high of $16.20 registered on Wednesday marks the upper end of the channel, while the low of $13.36 seen early Thursday is the channel support. 

The Oil market fundamentals are biased, as the coronavirus pandemic has caused a 30% slide in demand for the black gold.

Notably, the demand destruction is filling up storage tanks and it is feared that the world will likely run out of storage space in a few weeks. Vopak, the world’s biggest independent storage company, said on Tuesday its tanks were almost full, according to Reuters. 

As a result, WTI will likely have a tough time charting a convincing range breakout and is more likely to find acceptance under the channel support of $13.36. 

It's worth noting that the OPEC+, a group of major producers led by Saudi Arabia and Russia, is scheduled to implement the recently reached agreement to cut supply by a record 9.7 million barrels per day from May 1. However, most observers think it would fall short of compensating for the slide in demand.