Despite a rise in crude oil inventories by 3.4million barrels, crude oil price on the Brent variety managed to hold on to the gains it posted today after shaking off fears that the coronavirus outbreak could dampen demand.
Crude oil prices had risen by greater than 3% in Wednesday trading after the media was awash with reports that scientists across the world had come upon potential treatments and vaccines against the coronavirus. The coronavirus outbreak had sparked fears of reduced crude oil demand from China, the world’s largest consumer of the product.
Crude oil price of Brent crude is currently trading at $55.88, despite a higher-than-expected jump on crude oil inventories. The markets had expected a hike of 2.9m barrels. However, other fundamentals are holding crude oil prices up as well, with the expected OPEC+ meeting this month expected to address the coronavirus-induced pressure on crude oil prices with a view to possible production cuts.
The weekly chart shows that today’s price action has enabled the weekly candle to push up from the lows close to the 53.26 support level, and back above the 55.54 support on which it now rests. Extension of this recovery to the upside could potentially target 57.47, 58.69 and 60.26, which as at last week were all support areas that have now reversed roles to become resistance levels.
On the flip side, an extension of the downtrend could be on the cards if the price move above the 55.54 support is not sustained. With the coronavirus outbreak still on albeit with slowing global spread, the situation remains fluid and any risk-off provocation could set the tone for the renewed downside, heading into the weekend.
Headlines from China continue to remain relevant to crude oil price action for the week.