Crude Oil Price Retreat As Coronavirus Impact Bites
Crude oil price trades lower today as the rebound from the recent lows at $53.08 pause. Black gold managed to rebound the previous week as coronavirus fears ease. But the headlines are not favourable for crude as Japan reported yesterday an economic contraction for the fourth quarter of 2019, while expects more bad news in the first quarter because of coronavirus contagion. Chinese authorities promised more economic stimulus by offering more funding to banks and cut interest rates in a step to offset the impact of the coronavirus, buoying the outlook for crude oil demand.
Moody’s now expects growth to slow across the Asia Pacific region as the coronavirus spread, weakens demand and disrupts supply channels. Moody’s lowered the China growth forecast to 5.2% for 2020 from 5.8%, forecasting a severe but short-lived economic impact.
The situation in transportation is getting nasty around the globe as more and more airlines are cancelling flights across the world amid slower demand while some airways are entirely cancelling their flights from and to China.
Investors are waiting for OPEC to announce new cutbacks in crude oil production to bring balance in oil markets.
The Brent crude oil price is 1.50% lower at $56.70 as the price snapping a five-day winning streak. The technical outlook is clearly bearish as the crude oil price trading below the major daily moving averages.
On the downside, initial support for Brent crude oil price stands at $56.62 today’s low. More offers might emerge at $55 the low from February 13th. A credible break below that support, would result in a deeper move down to $53.08 the low from February 10th.
On the other side, Brent crude oil prices initial resistance stands at $57.56 the daily top. If the Brent crude price breaches the initial resistance, the next hurdle will be met at $59.14 the high from January 31. In case of a breakout the next obstacle will be met at $60.60 the high from January 29th.