Crude oil gave up yesterday’s inventory gains and is 2.5% lower on the day as fears over a second wave of the coronavirus hit markets. Fresh lockdown restrictions in France and other countries is weighing on oil prices over demand fears.
Oil was positive yesterday after inventories data from the American Petroleum Institute reported a fall in U.S. crude, gasoline and, distillate stocks. The Energy Information Administration is set to report their weekly inventories data today, a day later than usual, due to a public holiday.
India is seeing a rise in virus cases with the country set to overtake the U.S. with the most infections, which is bad news for the oil market as the nation is the world’s third-largest consumer of crude. France has Paris and other major cities on lockdown, whilst the U.K. turns the screw of restrictions in London from 9pm on Friday.
Weakening oil demand will have an effect on the course of action taken by OPEC at their December meeting. The committee had agreed to taper their oil production cuts from 7.7m barrels per day (bpd) to 2m bpd, but this cut will be under threat if global demand slows down once more due to virus restrictions.
Crude Oil Technical Outlook
The price of crude saw a strong close above the 50-day moving average yesterday but the price has dropped again and is threatening a bearish setup. Traders should go short with a stop loss at $41.50 with a target of 437.20 and $35.00.