- WTI seesaws around the 13-month low.
- Coronavirus-led likely reduction in demand keeps weighing on the energy prices.
- Geopolitical tension between Turkey and Syria, Saudi Arabia’s push for production cut offers intermediate pullbacks.
WTI bears dominate near $46.60, down 0.30%, during the early trading session on Friday. The black gold dropped to the lowest since early-January 2019 the previous day amid fears that coronavirus (COVID-19) will weigh on the global energy demand. However, the escalation of Turkey-Syria tension and Saudi Arabia’s push for more production cuts are likely to offer the latest pullback moves.
Coronavirus has been the key pandemic weighing over the global trading sentiment off-late. The increase in cases from South Korea and Italy were the initial triggers while the latest first-ones in the list, including the US, propelled the risk-off afterward.
Recently, the Bank of America/Merrill Lynch revises down the global growth forecast to 2.8% for 2020, the weakest since 2009.
This could be read in conjunction with the Reuters report stating Saudi Arabia’s likely reduction in oil exports to China, by nearly 5,00,000 barrels per day (bpd) in March, due to the slump in refinery demand. That said, Financial Times (FT) recently came out with the news that the kingdom is pushing hard for a production cut of additional one million bpd to be agreed during the next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia mostly known as OPEC+.
Elsewhere, geopolitical tension between Syria and Turkey gets stiff after the Syrian army killed nearly 29 Turkish troops. News recently crossed wires that the US stands by its NATO ally Turkey.
Amid all these catalysts, the US 10-year treasury yields decline two basis points (bps) to 1.277% whereas Japan’s NIKKEI drop 2.76% to 21,336 by the press time.
Oil traders will now keep eyes on the Coronavirus updates for near-term direction while the US Baker Hughes Rig Counts, prior 679, can also offer intermediate moves.
Technical Analysis
A sustained downside below the recent bottom of surrounding $45.95 can fetch the energy benchmark towards $44.50 ahead of highlighting 2018 low close to $42.00.
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