The continued spread of the coronavirus outside China has taken a significant toll on risky commodity assets, as crude oil prices were forced to endure renewed pounding on Thursday. Brent crude price fell by $7.13 as at the time of writing to $51.34 in a trading day which saw complete domination by sellers.
Crude oil price opened the day and was immediately on offer as a string of coronavirus-related reports hit the markets. New cases continue to crop up around the world, leading to market fears that the worst of the outbreak was yet to come.
The OPEC+ meetings begin on the 6th of March after Russia successfully torpedoed a move to have emergence meetings in February to cut production even further. IEA Chief Fatih Birol had also indicated earlier in the week that the agency would have to cut its 2020 growth demand forecasts even further, as crude oil demand hit 10-year lows.
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Technical Outlook for Crude Oil Price
Brent crude price is inching dangerously closer to breaking the $50 mark to the downside as it approaches the $50.64 support level in continuation of the fall from point D of the Gartley pattern. Having breached the support line at point C of the pattern (53.26), sellers are looking unstoppable at the moment as risk-off sentiment completely dominates the market.
A breakdown of the 50.64 support level allows Brent crude price to hit lows last seen on 24 Dec 2018. The lows of 1 May and 3 July 2017, located at 46.82 would then become the new downside target, along with the 44.16 support level (19 June 2017 low).
On the flip side, any bounce from the 50.64 support could allow Brent crude price to retest broken support levels at 53.26 and 55.59, all acting in a role reversal as new resistance areas. The outlook for crude oil price remains strongly bearish, and any recovery moves may be rallies in a downtrend.
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