- WTI prices drops further near the $52.00 mark.
- Coronavirus fears keep weighing on sentiment.
- The EIA reported a nearly 3.6M barrel build on Wednesday.
Prices of the American reference for the sweet light crude oil have accelerated the downside on Thursday and are now challenging the $52.00 mark per barrel.
WTI keeps focused on China, oversupply
Crude oil prices remain well into the negative territory this week as fears of an impact on the global economy from the Wuhan coronavirus continue to take a toll on traders’ sentiment. At the same time this is motivating investors to shrug off recent optimism following news citing the probability that the OPEC+ could extend the output cut agreement.
In this regard, markets’ attention is now on the upcoming statement from the World Health Organization (WHO) due later on Thursday. The WHO could declare the ongoing spread of the coronavirus a “global emergency”, which carries the potential to deepen the sell-off in crude oil.
Adding to the downbeat mood, the EIA reported on Wednesday an unexpected build in US crude oil supplies of nearly 3.6M barrels during last week.
Later in the week, Baker Hughes’ US oil rig count will close the docket on Friday.
What to look for around WTI
The outbreak of the Wuhan virus and its potential impact on Chinese/global growth have been heavily weighing on traders’ sentiment during the past couple of weeks, adding to the already rising concerns on the excess of crude oil supply in the markets. Supporting the later, and undermining any serious rebound, the IEA expects prices to remain capped during the first half of the year following a forecasted surplus of nearly a million bpd. On the supportive side for prices emerge the persistent supply disruptions in Libya, social unrest in Iraq and a fragile US-Iran scenario, all in combination with the OPEC+ rumours, declining US oil inventories and fresh effervescence surrounding Saudi Arabia.
WTI significant levels
At the moment the barrel of WTI is retreating 0.85% at $52.63 and a breach of $51.92 (2020 low Jan.30) would aim for $51.06 (monthly low Oct.3 2019) and finally $50.47 (monthly low Aug.7 2019). On the flip side, the next up barrier is located at $54.35 (weekly high Jan.29) seconded by $57.24 (200-day SMA) and then $58.46 (55-day SMA).
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