- WTI breaks down the Feb lows and bears have eyes on 2018 Dec support structure.
- Coronavirus is playing havoc on global demand sentiment, EIA data temp’ relief only.
- Bulls seek OPEC+ to intervein and support oil prices.
The price of oil is declining in the US session, with West Texas Intermediate crude now printing session lows of $48.33 from a high of $50.43, -2.61% at the time of writing. The move follows crude for April delivery falling by 49 cents, or 1%, to $49.41 a barrel on the New York Mercantile Exchange as worries about the spread of COVID-19 outside China plays havoc on demand sentiment, despite the relief from the smaller-than-expected weekly rise in US crude inventories.
Energy Information Administrationburushed aside
Earlier in the day, the Energy Information Administration revealed that US crude supplies edged up by 500,000 barrels for the week ended Feb. 21. This was below the expectations of a rise of 2.8 million barrels. the prior day, the American Petroleum Institute reported a climb of 1.3 million barrels. However, there was a muted reaction to the data considering how severe the spread of the coronavirus has become. “While there remains a wide range out potential outcomes, the risk to energy markets remains particularly elevated as travel restrictions could see ex-China demand weaken further,” analysts at TD Securities explained.
What the markets are now looking for is OPEC+ response. “Before energy markets can make a sustainable move higher, a more aggressive OPEC+ response is going to be needed at the March meeting, and thus far Russia is seemingly reluctant to participate in further curtailments — which is raising fears of an OPEC+ break-up. In the near-term, we expect CTAs to continue to add selling pressure in Brent and RBOB gasoline in response to strengthening downside momentum,” the analysts at TD Securities argued.
WTI levels
The price of oil is well sub of the $50, slicing through a 61.8% Fibonacci retracement of the late 2018 December rally to 2019 highs range. The price is now below the Fed support which is significant as also. Bears can seek out a run to the 78.6% Fibo at 47.33 and Dec 2018 resistance/support structure confluence. Below there opens the Dec 2018 lows of 42.40.
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